doTERRA v. Kruger

2021 UT 24, 491 P.3d 939
CourtUtah Supreme Court
DecidedJuly 1, 2021
DocketCase No. 20191040
StatusPublished
Cited by4 cases

This text of 2021 UT 24 (doTERRA v. Kruger) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
doTERRA v. Kruger, 2021 UT 24, 491 P.3d 939 (Utah 2021).

Opinion

2021 UT 24

IN THE

SUPREME COURT OF THE STATE OF UTAH

dōTERRA INTERNATIONAL, LLC, Petitioner, v. JESSICA KRUGER, Respondent.

No. 20191040 Heard March 10, 2021 Filed July 1, 2021

On Interlocutory Appeal

Fourth District, Utah County The Honorable Thomas Low No. 160401667

Attorneys 1: Steven C. Smith, Irvine, CA, Aaron R. Harris, Lehi, Daniel S. Wittenberg, Katherine R. Nichols, Salt Lake City, for petitioners Blake W. Johnson, Orem, for respondent

JUSTICE PEARCE authored the opinion of the Court in which CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE, JUSTICE HIMONAS and JUSTICE PETERSEN joined. JUSTICE HIMONAS authored a concurring opinion, in which JUSTICE PETERSEN joined.

JUSTICE PEARCE, opinion of the Court:

1 Amicus curiae briefs were submitted by John A. Anderson, Lauren E.H. DiFrancesco, Salt Lake City, on behalf of the International Association of Defense Counsel, and Alyson C. McAllister, Paul M. Simmons, Salt Lake City, on behalf of the Utah Association for Justice. dōTERRA v. KRUGER Opinion of the Court

INTRODUCTION ¶1 Jessica Kruger, a dōTERRA International, LLC (dōTERRA) distributor or Wellness Advocate, purchased a dōTERRA product and applied it to her skin before visiting a tanning salon. Shortly thereafter, Kruger was diagnosed with second and third-degree chemical burns. ¶2 Kruger brought legal action against dōTERRA, seeking, among other things, punitive damages based on dōTERRA’s failure to warn about the potential dangers of its product. dōTERRA moved for partial summary judgment arguing that Kruger waived the right to seek punitive damages in the paperwork she signed to become a dōTERRA distributor. The district court denied that motion and ruled that Utah law does not allow preinjury waivers of punitive damages. In the course of reaching that decision, the district court referred to dōTERRA’s agreement with Kruger as a contract of adhesion. ¶3 dōTERRA sought an interlocutory appeal. We affirm the district court’s denial of the partial motion for summary judgment, but we employ a different rationale than the district court did. To the extent that the district court’s reference to dōTERRA’s contract as one of adhesion constitutes a ruling on that issue, we vacate it. BACKGROUND ¶4 Kruger wanted to become a dōTERRA Wellness Advocate, which is the term that dōTERRA uses for its independent distributors. 2 dōTERRA required her to sign a Wellness Advocate Agreement (Agreement). Once a Wellness Advocate, Kruger purchased ClaryCalm, a dōTERRA product intended to address “normal symptoms associated with PMS and the transition through menopause.” The labeling did not mention that the product contained a high concentration of an ingredient that causes sensitivity to the sun. In fact, the label said: “Does not cause sun sensitivity.”

2 This case comes before us as an interlocutory appeal of the district court’s decision to deny dōTERRA’s motion for partial summary judgment. In this procedural posture, we consider the alleged facts in the light most favorable to the non-moving party, Kruger. Massey v. Griffiths, 2007 UT 10, ¶ 8, 152 P.3d 312.

2 Cite as: 2021 UT 24 Opinion of the Court

¶5 Kruger went tanning several hours after she had applied ClaryCalm to her abdomen and back. That evening, she noticed a sunburn where she had used ClaryCalm. The sunburn worsened the next day, and it became even more severe the day after that. Kruger sought treatment at an urgent care facility. The urgent care provider, observing the burn’s severity, sent her to the hospital. The hospital diagnosed her with second and third-degree chemical burns. ¶6 Subsequent testing revealed that ClaryCalm contained a compound called bergapten. Bergapten can cause increased sensitivity to the sun at 15 ppm. ClaryCalm contained the ingredient at a concentration of 347 ppm. ¶7 dōTERRA warned consumers when its other products caused sun sensitivity, but, by its own admission, erroneously left this warning off of the ClaryCalm label. Prior to Kruger’s injury, other customers had complained to dōTERRA about burns after using ClaryCalm. Some of those customers requested that dōTERRA place a warning on ClaryCalm about the risk of burns. dōTERRA eventually reformulated the product to remove the phototoxic compound that Kruger claims caused her burns. ¶8 Kruger filed a complaint against dōTERRA seeking recovery for her injuries. She also sought punitive damages “to deter future similar conduct.” dōTERRA moved for partial summary judgment. ¶9 dōTERRA argued that Kruger was contractually restricted from seeking punitive damages because, as a dōTERRA Wellness Advocate, she had waived her ability to claim punitive damages. dōTERRA based its motion on the Agreement. That document states that dōTERRA . . . shall not be liable for special, indirect, incidental, consequential, punitive, or exemplary damages. If dōTERRA is found to be in breach of the [Agreement], the maximum amount of damages I may claim shall be limited to the amount of unsold inventory that I personally purchased from the company and have remaining on hand. I release and agree to indemnify dōTERRA and its affiliates from any and all liability, damages, fines, penalties, or other awards or settlements arising from, or relating to my actions in the promotion or operation of my dōTERRA independent business and any activities related to it ....

3 dōTERRA v. KRUGER Opinion of the Court

¶10 The Agreement incorporated the dōTERRA Policy Manual by reference. The Policy Manual provides that dōTERRA shall not be liable for any: . . . special, indirect, incidental, punitive, or consequential damages, including loss of profits, arising from or related to the operation or use of the products including, without limitation, damages arising from loss of revenue or profits, failure to realize savings or other benefits, damage to equipment, and claims against the [Wellness Advocate] by any third person . . . . dōTERRA argued in its motion for partial summary judgment that the two provisions demonstrated that Kruger had waived any right she may have had to claim punitive damages from her injuries. ¶11 The district court denied dōTERRA’s motion. The district court acknowledged that the Agreement and Policy Manual expressly reference a waiver of punitive damages. But the district court concluded that Utah law prohibits a party from enforcing a preinjury waiver of liability for its own egregious conduct. 3 ¶12 Specifically, the district court found that Russ v. Woodside Homes, Inc., 905 P.2d 901 (Utah Ct. App. 1995), stands in the way of preinjury waivers of punitive damages. The Russ court reasoned that, “Generally, parties ‘not engaged in public service may properly bargain against liability for harm caused by their ordinary negligence in performance of contractual duty; but such an exemption is always invalid if it applies to harm wil[l]fully inflicted or caused by gross or wanton negligence.’” Id. at 904 (citation omitted). ¶13 dōTERRA interpreted Russ differently. dōTERRA agreed that Russ precludes a party from enforcing a preinjury waiver of liability. But dōTERRA argued that its contract contained a preinjury waiver of a remedy; a provision it contended the Russ court did not explicitly address. ¶14 The district court rejected this distinction, finding, “Punitive damages are a form of liability.” The district court noted that, in

3Kruger also argued that she had not waived her right to seek punitive damages because dōTERRA’s waiver was not “clear and unequivocal,” as Utah law requires. The district court did not address that argument.

4 Cite as: 2021 UT 24 Opinion of the Court

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2021 UT 24, 491 P.3d 939, Counsel Stack Legal Research, https://law.counselstack.com/opinion/doterra-v-kruger-utah-2021.