H&L represented the distributor and a retailer of a children’s toy called Aqua Dots, consisting of colored beads that could be arranged on a grid and that, when exposed to water, would adhere to each other to form designs. Unbeknownst to H&L’s clients, the Chinese manufacturer that actually made the beads unilaterally decided not to use a chemical included in the product specification, and instead used a different chemical that produces temporary neurotoxic effects in humans when ingested. Plaintiffs’ toddler ingested several of these beads and had a temporary adverse reaction, which required a brief hospitalization, after which the toddler fully recovered. Plaintiffs sued H&L’s clients and other defendants, claiming that their child suffered permanent brain injury from his ingestion of the beads. Plaintiffs sought compensatory damages for permanent brain injury, as well as punitive damages. In pre-trial rulings, the district granted defendants partial summary judgment striking the punitive damages allegations, and also excluded the opinions of plaintiffs’ toxicology expert that the ingestion of the beads caused the child to experience permanent brain damage. Consequently, the trial court also granted defendants partial summary judgment barring plaintiffs from seeking compensatory damages for permanent brain injury. After a brief trial, a jury awarded plaintiffs damages limited to their child’s temporary reaction to ingesting the beads.
Plaintiffs appealed, seeking reversal of the district court’s pretrial rulings significantly limiting the categories of damages plaintiffs could recover. In an unpublished memorandum disposition, the Ninth Circuit affirmed those rulings. It held that defendants had not acted with the “evil mind” that Arizona law (which applied) requires for imposition of punitive damages, especially given the fact that defendants did not know and could not have known of the Chinese manufacturer’s chemical switch. The Ninth Circuit also upheld the district court’s exclusion of the causation opinions of plaintiffs’ toxicology expert (and the consequent bar on plaintiffs’ seeking damages for permanent brain injury), both because plaintiffs had not timely disclosed some of those opinions and because the opinions did not meet the threshold for reliability of expert opinions that the U.S. Supreme Court laid out in Daubert v. Merrell Dow Pharmaceuticals, Inc.
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