Must punitive damage waivers be clear and unequivocal in Utah? doTERRA v. Kruger Explained

The Utah Supreme Court in doTERRA v. Kruger clarified the stringent requirements for waiving punitive damages claims before injury occurs. The case arose when Jessica Kruger, a doTERRA distributor, suffered severe chemical burns from using ClaryCalm, a product that contained high concentrations of bergapten despite being labeled as not causing sun sensitivity.

Background and Facts

Kruger signed a distributor agreement containing broad liability limitations stating doTERRA “shall not be liable for special, indirect, incidental, consequential, punitive, or exemplary damages.” The agreement also required Kruger to “release and indemnify doTERRA” from liability arising from her distributorship activities. After suffering second and third-degree chemical burns from ClaryCalm, Kruger sued for punitive damages. DoTERRA moved for partial summary judgment, arguing the distributor agreement waived punitive damages.

Key Legal Issues

The central question was whether Utah law permits preinjury waivers of punitive damages and, if so, what standard applies to such waivers. The district court denied doTERRA’s motion, ruling that Utah law prohibits preinjury waivers of punitive damages. DoTERRA sought interlocutory appeal, challenging both the ruling on waiver validity and the district court’s characterization of the agreement as a contract of adhesion.

Court’s Analysis and Holding

Rather than addressing whether Utah law permits punitive damage waivers, the Supreme Court affirmed on narrower grounds. Applying precedent from Union Pacific Railroad Co. v. El Paso Natural Gas Co., the court held that any waiver of punitive damages must be “clear and unequivocal.” The court emphasized that “the law does not look with favor upon one exacting a covenant to relieve himself of the basic duty which the law imposes on everyone: that of using due care for the safety of others.”

Examining doTERRA’s agreement language, the court found it focused on business relationships rather than personal injury. While the Policy Manual mentioned damages “arising from or related to the operation or use of the products,” its examples concerned business losses like “loss of revenue or profits” and “damage to equipment.” The court concluded this language did not clearly and unambiguously waive personal injury punitive damages.

Practice Implications

This decision establishes that general liability limitation clauses in business agreements will not suffice to waive personal injury punitive damages. Courts will presume against such waivers and require explicit language addressing personal injury and bodily harm. The court also vacated the district court’s contract of adhesion finding, leaving that issue for future determination. Justice Himonas’s concurrence suggested such waivers violate public policy based on Utah’s prohibition against insuring punitive damages.