Title: Steven C. Tietsworth v. Harley-Davidson, Inc.

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2004 WI 32 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
02-1034 
COMPLETE TITLE: 
 
 
Steven C. Tietsworth, David Bratz, John  
W. Myers, Gary Streitenberger, and Gary  
Wegner,  
          Plaintiffs-Appellants, 
     v. 
Harley-Davidson, Inc., and  
Harley-Davidson Motor Company,  
          Defendants-Respondents- 
          Petitioners. 
 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2003 WI App 75 
Reported at: 261 Wis. 2d 755, 661 N.W.2d 450 
(Ct. App. 2003-Published) 
 
 
OPINION FILED: 
March 26, 2004   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
November 5, 2003   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Milwaukee   
 
JUDGE: 
William J. Haese   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
ABRAHAMSON, C.J., dissents (opinion filed).   
 
NOT PARTICIPATING: BRADLEY, J., withdrew from participation.   
 
 
 
ATTORNEYS: 
 
For 
the 
defendants-respondents-petitioners 
there 
were 
briefs by W. Stuart Parsons, Patrick W. Schmidt, O. Thomas 
Armstrong, Jeffrey O. Davis, Kelly H. Twigger and Quarles & 
Brady, Milwaukee, and Robert L. Binder and Foley & Lardner, 
Milwaukee, and oral argument by W. Stuart Parsons. 
 
For the plaintiffs-appellants there was a brief by Ted W. 
Warshafsky, Frank T. Crivello, II, and Warshafsky, Rotter, 
Tarnoff, Reinhardt & Bloch, S.C., Milwaukee; Jonathan D. Selbin, 
Lisa J. Leebove and Lieff, Cabraser, Heimann & Bernstein, LLP, 
San Francisco, CA; and David J. Bershad, Michael M. Buchman and 
Milberg, Weiss, Bershad, Hynes & Lerach, LLP, New York, NY and 
 
 
2
Shpetim Ademi, Guri Ademi, Robert K. O’Reilly and Ademi & 
O’Reilly, LLP, Cudahy, and oral argument by Jonathan D. Selbin. 
 
An amicus curiae brief was filed by James A. Buchen, 
Madison, on behalf of Wisconsin Manufacturers & Commerce.  
 
An amicus curiae brief was filed by Jeffrey S. Fertl, 
Milwaukee, John H. Beisner, Washington, DC, Hugh F. Young, Jr. 
(of counsel) Reston, VA, on behalf of Product Liability Advisory 
Council, Inc. 
 
 
2004 WI 32 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  02-1034  
(L.C. No. 
01 CV 5928) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Steven C. Tietsworth, David Bratz, John  
W. Myers, Gary Streitenberger, and Gary  
Wegner,  
 
          Plaintiffs-Appellants, 
 
     v. 
 
Harley-Davidson, Inc., and  
Harley-Davidson Motor Company,  
 
          Defendants-Respondents- 
          Petitioners. 
 
FILED 
 
MAR 26, 2004 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed.   
 
¶1 
DIANE S. SYKES, J.  This is a class action lawsuit on 
behalf of certain Harley-Davidson motorcycle owners seeking 
compensatory and punitive damages and injunctive relief, under 
several 
legal 
theories, 
for 
an 
alleged 
defect 
in 
the 
motorcycles' engines.  The plaintiffs have not alleged any 
personal injury or property damage caused by the defective 
engines, nor have they alleged that their motorcycle engines 
have actually failed or malfunctioned in any way.  They allege, 
No. 
02-1034   
 
2 
 
rather, that their motorcycles are diminished in value because 
the defect creates a "propensity" for premature engine failure. 
¶2 
 
The 
plaintiffs 
originally 
pleaded 
claims 
for 
negligence, strict products liability, fraud, and deceptive 
trade practices under Wis. Stat. § 100.18(1) and (11)(b)(1999-
2000).1  The circuit court dismissed the entire action for 
failure to state a claim.  The plaintiffs appealed only the 
dismissal of their claims for common-law fraud and statutory 
deceptive trade practices, and the court of appeals reinstated 
both.  We reverse. 
¶3  An allegation that a product is diminished in value 
because the product line has demonstrated a propensity for 
premature failure such that the product might or will at some 
point in the future fail prematurely is too uncertain and 
speculative to constitute a legally cognizable tort injury and 
is therefore insufficient to state damages in a tort claim for 
fraud.  In addition, the economic loss doctrine bars this claim. 
¶4  The plaintiffs have also failed to state a claim for 
deceptive trade practices in violation of Wis. Stat. § 100.18.  
The statute provides a private cause of action for pecuniary 
loss resulting from an advertisement to the public that contains 
an "assertion, representation or statement of fact which is 
untrue, deceptive or misleading."  Wis. Stat. § 100.18(1), 
(11)(b).  The plaintiffs' claim is based primarily on the 
                                                 
1 All references to the Wisconsin Statutes are to the 1999-
2000 version unless otherwise indicated. 
No. 
02-1034   
 
3 
 
allegation that Harley-Davidson ("Harley") failed to disclose 
the engine defect prior to the plaintiffs' motorcycle purchases.  
A 
non-disclosure 
does 
not 
constitute 
an 
"assertion, 
representation or statement of fact" under Wis. Stat. § 
100.18(1).  The plaintiffs also allege that Harley's advertising 
material described the motorcycle engine as "premium" quality, 
"a masterpiece," and "[e]ighty-eight cubic inches filled to the 
brim with torque and ready to take you thundering down the 
road."  This is classic advertising puffery, non-actionable at 
common law and under the statute. 
     
I.  FACTS AND PROCEDURAL HISTORY 
¶5 
This is an appeal of a motion to dismiss for failure 
to state a claim, and therefore we accept as true, for purposes 
of this review, the following facts from the amended class 
action complaint.  Plaintiff Steven C. Tietsworth and the 
members of the proposed class own or lease 1999 or early-2000 
model year Harley motorcycles equipped with Twin Cam 88 or Twin 
Cam 88B engines.  Harley's marketing and advertising literature 
contained the following statement about the TC-88 engines: 
Developing 
[the 
TC-88s] 
was 
a 
six-year 
process. . . . The result 
is a 
masterpiece.  We 
studied everything from the way oil moves through the 
inside, to the way a rocker cover does its job of 
staying oil-tight.  Only 21 functional parts carry 
over into the new design.  What does carry over is the 
power of a Harley-Davidson® engine, only more so. 
Harley also stated that the motorcycles were "premium" quality, 
and described the TC-88 engine as "[e]ighty-eight cubic inches 
No. 
02-1034   
 
4 
 
filled to the brim with torque and ready to take you thundering 
down the road." 
¶6  On January 22, 2001, Harley sent a letter to Tietsworth 
and other owners of Harley motorcycles informing them that "the 
rear cam bearing in a small number of Harley-Davidson's Twin Cam 
88 engines has failed.  While it is unlikely that you will ever 
have to worry about this situation, you have our assurance that 
Harley-Davidson is committed to your satisfaction." (Emphasis 
added in amended complaint.)  The letter went on to explain that 
the company was extending the warranty on the cam bearing from 
the standard one-year/unlimited mileage warranty, to a five-
year/50,000 mile warranty.  Separately, Harley developed a $495 
"cam bearing repair kit" and made the kit available to its 
dealers and service departments, "to expedite rear cam bearing 
repair."    
¶7 
On June 28, 2001, Tietsworth, a California resident, 
filed this proposed class action lawsuit against Harley in 
Milwaukee County Circuit Court, alleging four claims: (1) 
negligence; (2) strict 
products liability; 
(3) 
common-law 
fraudulent 
concealment; and 
(4) deceptive 
trade 
practices 
contrary to Wis. Stat. § 100.18(1)(the Wisconsin Deceptive Trade 
Practices Act or "DTPA").  Tietsworth later amended the 
complaint to name as representative plaintiffs four Wisconsin 
owners of motorcycles equipped with TC-88 engines.   
¶8  The amended complaint alleges that the cam bearing 
mechanism in the 1999 and early-2000 model year TC-88 engines is 
inherently 
defective, 
causing 
an 
unreasonably 
dangerous 
No. 
02-1034   
 
5 
 
propensity for premature engine failure.  As is pertinent to the 
common-law 
fraud 
and 
statutory 
DTPA 
claims, 
the 
amended 
complaint alleged that Harley's failure to disclose the cam 
bearing 
defect 
induced 
the 
plaintiffs 
to 
purchase 
their 
motorcycles by causing them to reasonably rely upon Harley's 
representations 
regarding 
the 
"premium" 
quality 
of 
the 
motorcycles. 
¶9  The amended complaint further alleges that if the 
plaintiffs had known of the engine defect, they either would not 
have purchased the product or would have paid less for it.  The 
amended 
complaint 
does 
not 
allege 
that 
the 
plaintiffs' 
motorcycles 
have 
actually 
suffered 
engine 
failure, 
have 
malfunctioned in any way, or are reasonably certain to fail or 
malfunction.  Nor does the amended complaint allege any property 
damage or personal injury arising out of the engine defect.  
Rather, the amended complaint alleges that the plaintiffs' 
motorcycles have diminished value, including diminished resale 
value, because Harley motorcycles equipped with TC-88 engines 
have demonstrated a "propensity" for premature engine failure 
and/or fail prematurely.     
 
¶10 Harley moved to dismiss the complaint.  The Milwaukee 
County Circuit Court, the Honorable William J. Haese, granted 
Harley's motion, dismissing the complaint in its entirety for 
failure to state a claim.  The plaintiffs appealed the dismissal 
of their common-law fraud and DTPA claims only, and the court of 
appeals reinstated both.  Tietsworth v. Harley-Davidson, Inc., 
2003 WI App 75, ¶1, 261 Wis. 2d 755, 661 N.W.2d 450. 
No. 
02-1034   
 
6 
 
II.  STANDARDS OF REVIEW 
 
¶11 A motion to dismiss for failure to state a claim tests 
whether the complaint is legally sufficient to state a cause of 
action for which relief may be granted.  Watts v. Watts, 137 
Wis. 2d 506, 512, 405 N.W.2d 305 (1987).  We review a dismissal 
for failure to state a claim de novo, accepting the facts 
alleged in the complaint (or here, the amended complaint) as 
true for purposes of our review.  Id.; see also Northridge Co. 
v. W.R. Grace & Co., 162 Wis. 2d 918, 923-24, 471 N.W.2d 179 
(1991).     
III.  DISCUSSION 
A.  Common-Law Fraud Claim 
 
¶12 The plaintiffs' common-law fraud claim is premised on 
the allegation that Harley failed to disclose or concealed the 
existence of the cam bearing defect prior to the plaintiffs' 
purchases of their motorcycles.  It is well-established that a 
nondisclosure is not actionable as a misrepresentation tort 
unless there is a duty to disclose.  Ollerman v. O'Rourke Co., 
Inc., 94 Wis. 2d 17, 26, 288 N.W.2d 95 (1980).  Our decision in 
Ollerman outlined the three categories of misrepresentation in 
Wisconsin 
law——intentional 
misrepresentation, 
negligent 
misrepresentation, and strict responsibility misrepresentation——
and described the common and distinct elements of the three 
torts.  Id. at 24-25. 
¶13  All misrepresentation claims share the following 
required 
elements: 
1) 
the 
defendant 
must 
have 
made 
a 
representation of fact to the plaintiff; 2) the representation 
No. 
02-1034   
 
7 
 
of fact must be false; and 3) the plaintiff must have believed 
and relied on the misrepresentation to his detriment or damage.  
Id.  The plaintiffs here allege intentional misrepresentation, 
which 
carries 
the 
following 
additional 
elements: 
4) 
the 
defendant must have made the misrepresentation with knowledge 
that it was false or recklessly without caring whether it was 
true or false; and 5) the defendant must have made the 
misrepresentation with intent to deceive and to induce the 
plaintiff to act on it to his detriment or damage.  Id. 
¶14  Ollerman reiterated the general rule that in a sales 
or business transaction, "silence, a failure to disclose a fact, 
is not an intentional misrepresentation unless the seller has a 
duty to disclose."  Id. at 26.  The existence and scope of a 
duty to disclose are questions of law for the court.  Id. at 27.  
Ollerman held that "a subdivider-vendor of a residential lot has 
a duty to a 'non-commercial' purchaser to disclose facts which 
are known to the vendor, which are material to the transaction, 
and which are not readily discernible to the purchaser."  Id. at 
42.  We specified that this was a "narrow holding," premised on 
certain policy considerations present in non-commercial real 
estate transactions.  Id. at 41-42. 
¶15 The transactions at issue here, however, are motorcycle 
purchases, not residential real estate purchases, and it is an 
open question whether the duty to disclose recognized in 
Ollerman extends more broadly to sales of consumer goods.  This 
is a significant common-law policy issue.  Id. at 27. ("[W]hen a 
court resolves a question of legal duty the court is making a 
No. 
02-1034   
 
8 
 
policy determination.")  But the parties did not brief it, and 
therefore we do not decide it. 
i. No Legally Cognizable Injury 
¶16 Ollerman 
also 
held 
that 
damages 
in 
intentional 
misrepresentation cases are measured according to the "benefit 
of the bargain" rule, "typically stated as the difference 
between the value of the property as represented and its actual 
value as purchased."  Id. at 52-53.  "Benefit of the bargain" 
damages in fraud cases "depend on the nature of the bargain and 
the circumstances of each case."  Id. at 53. 
¶17  In the context of deciding when a claim accrues for 
purposes of the statute of limitations, we have generally held 
that a tort claim is not capable of present enforcement (and 
therefore does not accrue) unless the plaintiff has suffered 
actual damage. Pritzlaff v. Archdiocese of Milwaukee, 194 
Wis. 2d 302, 315, 533 N.W.2d 780 (1995); Hennekens v. Hoerl, 160 
Wis. 2d 144, 152, 465 N.W.2d 812 (1991).  Actual damage is harm 
that has already occurred or is "reasonably certain" to occur in 
the future.  Pritzlaff, 194 Wis. 2d at 315; Hennekens, 160 Wis. 
2d at 152-53.  Actual damage is not the mere possibility of 
future harm.  Id. at 153 (citing Meracle v. Children's Serv. 
Soc., 149 Wis. 2d 19, 26-27, 437 N.W.2d 532 (1989)).  By 
statute, a fraud claim accrues when the aggrieved party 
discovers the facts constituting the fraud.  Wis. Stat. 
§ 893.93(1)(b).2  Although we are not confronted here with a 
                                                 
 
2  The statute modifies the older cases cited by the 
plaintiffs.  Gollon v. Jackson Milling Co., 224 Wis. 618, 625, 
No. 
02-1034   
 
9 
 
question of when this claim accrued for purposes of a statute of 
limitations defense, the amended complaint must adequately plead 
an actual injury——a loss or damage that has already occurred or 
is reasonably certain to occur——in order to state an actionable 
fraud claim.  Ollerman, 94 Wis. 2d at 25, 54.  In addition, 
fraud claims must be pleaded with particularity.  Wis. Stat. 
§ 802.03(2). 
¶18  The injury complained of here is diminution in value 
only——the plaintiffs allege that their motorcycles are worth 
less than they paid for them.  However, the amended complaint 
does not allege that the plaintiffs' motorcycles have diminished 
value because their engines have failed, will fail, or are 
reasonably certain to fail as a result of the TC-88 cam bearing 
defect.  The amended complaint does not allege that the 
plaintiffs have sold their motorcycles at a loss because of the 
alleged engine defect.  The amended complaint alleges only that 
the motorcycles have diminished value——primarily diminished 
potential resale value——because Harley motorcycles equipped with 
TC-88 engines have demonstrated a "propensity" for premature 
engine failure and/or will fail as a result of the cam bearing 
defect.  This is insufficient to state a legally cognizable 
injury for purposes of a fraud claim. 
                                                                                                                                                             
273 N.W. 59 (1937)(a fraud is complete and cause of action 
accrues at the time the fraud is perpetrated, not when the fraud 
is 
discovered 
or 
consequential 
damages 
occur); 
Stahl 
v. 
Broeckert, 170 Wis. 627, 629, 176 N.W. 66 (1920)(same); Jacobs 
v. Frederick, 81 Wis. 254, 256, 51 N.W. 320 (1892)(same). 
No. 
02-1034   
 
10 
 
¶19  Diminished value premised upon a mere possibility of 
future product failure is too speculative and uncertain to 
support a fraud claim.  The plaintiffs do not specifically 
allege that their particular motorcycles will fail prematurely, 
only that the Harley product line that consists of motorcycles 
with TC-88 engines has demonstrated a propensity for premature 
engine failure.  An allegation that a particular product line 
fails prematurely does not constitute an allegation that the 
plaintiffs' particular motorcycles will do so, only that there 
is a possibility that they will do so. 
¶20  We certainly agree with the court of appeals that the 
damages allegations in a fraud complaint are not evaluated 
against a standard of "absolute certainty" for purposes of a 
motion to dismiss for failure to state a claim.  Tietsworth, 261 
Wis. 2d 755, ¶16.  But an allegation that a product is 
diminished in value because of an event or circumstance that 
might——or 
might 
not——occur 
in 
the 
future 
is 
inherently 
conjectural and does not allege actual benefit-of-the-bargain 
damages with the "reasonable certainty" required to state a 
fraud claim.     
 
¶21 This conclusion is consistent with many federal and 
state court decisions that have affirmed the dismissal of claims 
brought under fraud, strict products liability, and other tort 
theories where the allegedly defective product has not actually 
malfunctioned.  These "no injury" cases are too numerous to 
list, but for a representative sample, see, e.g., Angus v. 
Shiley Inc., 989 F.2d 142, 147-48 (3d Cir. 1993)(affirming 
No. 
02-1034   
 
11 
 
dismissal of a claim for intentional infliction of emotional 
distress based on allegedly defective heart valve that was 
functioning properly); Carlson v. General Motors Corp., 883 F.2d 
287, 297 (4th Cir. 1989)(affirming dismissal of a claim for 
diminished resale value of diesel cars due to "poor reputation" 
rather than actual damage or loss resulting from vehicle 
defect); Briehl v. General Motors Corp., 172 F.3d 623, 627-29 
(8th Cir. 1999)(affirming dismissal of class action lawsuit for 
fraud and breach of warranty where the only alleged damage from 
vehicles' defective brake system was overpayment and diminished 
resale value); Jarman v. United Industries Corp., 98 F.Supp.2d 
757, 767 (S.D. Miss. 2000)(dismissing fraud, warranty, and 
various statutory claims for purchase of allegedly ineffective 
pesticide where there is no allegation of actual product 
failure); Weaver v. Chrysler Corp., 172 F.R.D. 96, 99-100 
(S.D.N.Y. 1997)(dismissing class action fraud and warranty 
lawsuit for allegedly defective integrated child seats where 
there is no allegation that the product has malfunctioned or the 
defect manifested itself); Yost v. General Motors Corp., 651 
F.Supp. 656, 657-58 (D.N.J. 1986)(dismissing fraud and warranty 
claim 
for 
alleged 
engine 
defect 
where 
engine 
has 
not 
malfunctioned and plaintiff alleges diminished value only); 
Ziegelmann v. DaimlerChrysler Corp., 649 N.W.2d 556, 559-65 
(N.D. 2002)(collecting cases and dismissing class action fraud 
and negligence lawsuit for alleged brake system defect where 
damages were premised only on diminution in value); Frank v. 
DaimlerChrysler Corp., 741 N.Y.S.2d 9, 17 (N.Y. App. Div. 
No. 
02-1034   
 
12 
 
2002)(dismissing class action fraud, negligence, and products 
liability lawsuit for alleged seat backrest defect in the 
absence of allegation of actual product failure); Yu v. Int'l 
Bus. 
Mach. 
Corp., 
732 
N.E.2d 
1173, 
1177-78 
(Ill. 
App. 
2000)(affirming dismissal of class action fraud, negligence, and 
deceptive 
trade practices 
lawsuit 
for 
allegedly 
defective 
computer software where there was no allegation of actual 
product failure); Ford Motor Co. v. Rice, 726 So.2d 626, 631 
(Ala. 1998)(affirming dismissal of class action fraud lawsuit 
for SUV design defect alleged to cause rollover tendency where 
defect did not manifest itself and vehicles did not roll over). 
 
¶22  We note, however, that the amended complaint does 
contain one allegation that is arguably sufficient to state a 
more particularized injury to these plaintiffs: at paragraph 35 
of the amended complaint the plaintiffs allege that Harley knew 
that "all of the motorcycles with the TC-88s are defective and 
will prematurely fail."  This reference to "all" motorcycles 
with TC-88 engines includes the plaintiffs' motorcycles, and 
therefore can be read as the equivalent of a more particularized 
allegation 
that 
the 
plaintiffs' 
motorcycles 
will 
fail 
prematurely.  Accordingly, we address the application of the 
economic loss doctrine to this claim.      
ii. Economic Loss Doctrine 
¶23 Apart 
from 
the 
generally 
insufficient 
damages 
allegations in the fraud cause of action, the economic loss 
doctrine bars this claim.  The economic loss doctrine is a 
judicially-created remedies principle that operates generally to 
No. 
02-1034   
 
13 
 
preclude contracting parties from pursuing tort recovery for 
purely economic or commercial losses associated with the 
contract relationship.  Digicorp, Inc. v. Ameritech Corp., 2003 
WI 54, ¶¶33-35, 262 Wis. 2d 32, 662 N.W.2d 652. 
¶24  Adopted by this court in Sunnyslope Grading, Inc. v. 
Miller, Bradford & Risberg, Inc., 148 Wis. 2d 910, 921, 437 
N.W.2d 213 (1989), the economic loss doctrine precludes recovery 
in tort for economic losses resulting from the failure of a 
product to live up to a contracting party's expectations.  
Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235, 
245-46, 593 N.W.2d 445 (1999).  The doctrine generally "requires 
transacting 
parties 
in 
Wisconsin 
to 
pursue 
only 
their 
contractual remedies when asserting an economic loss claim."  
Digicorp, 262 Wis. 2d 32, ¶34. 
¶25  "Economic loss" for purposes of the doctrine includes 
"the diminution in the value of the product because it is 
inferior and does not work for the general purposes for which it 
was manufactured and sold."  Northridge, 162 Wis. 2d at 925-26.  
It includes both direct economic loss and consequential economic 
loss.  Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 
Wis. 2d 395, 401, 573 N.W.2d 842 (1998).  The economic loss 
doctrine has been extended to consumer transactions as well as 
transactions between commercial contracting parties.  State Farm 
Mut. Auto. Ins. Co. v. Ford Motor Co., 225 Wis. 2d 305, 311-12, 
592 N.W.2d 201 (1999). 
¶26 
 
The 
economic 
loss 
doctrine 
is 
"based 
on 
an 
understanding that contract law and the law of warranty, in 
No. 
02-1034   
 
14 
 
particular, is better suited than tort law for dealing with 
purely economic loss in the commercial arena."  Daanen, 216 
Wis. 2d at 403-04.  "If a [contracting party] is permitted to 
sue in tort when a transaction does not work out as expected, 
that party is in effect rewriting the agreement to obtain a 
benefit that was not part of the bargain."  Kailin v. Armstrong, 
2002 WI App 70, ¶27 n.19, 252 Wis. 2d 676, 643 N.W.2d 132. 
¶27  Thus, we have often stated that the economic loss 
doctrine 
serves 
the 
following 
three 
important 
common-law 
policies: 
(1) to maintain the fundamental distinction between 
tort and contract law; (2) to protect commercial 
parties' 
freedom 
to 
allocate 
economic 
risk 
by 
contract; and (3) to encourage the party best situated 
to assess the risk of economic loss, the commercial 
purchaser, to assume, allocate, or insure against the 
risk. 
Daanen, 216 Wis. 2d at 403. 
¶28  The distinction between tort and contract law rests on 
their differing concepts of duty: "contract law rests on 
bargained-for obligations, while tort law is based on legal 
obligations" imposed on society at large.  Wausau Tile, 226 Wis. 
2d at 247; see also State Farm, 225 Wis. 2d at 316-18.  The 
economic loss doctrine "recognizes that whether a product meets 
a certain level of performance or a purchaser's expectations is 
not a matter of societal interest [but] [r]ather,  . . . [is] a 
matter of contract."  Id. at 321.  "These differences in the 
source and nature of duty in contract and tort law produce 
different rules regarding remedy and damages (punitive damages 
No. 
02-1034   
 
15 
 
are not recoverable in contract actions, for example), and the 
economic loss doctrine exists in large part to keep each in its 
proper sphere."  Digicorp, 262 Wis. 2d 32, ¶75 (Sykes, J., 
concurring in part, dissenting in part). 
 
¶29 The economic loss doctrine has been applied by 
Wisconsin 
courts 
to 
bar 
claims 
of 
negligent 
and 
strict 
responsibility misrepresentation, and by federal courts applying 
Wisconsin law to bar claims of negligent, strict responsibility, 
and intentional misrepresentation.  Selzer v. Brunsell Bros., 
Ltd., 2002 WI App 232, ¶¶31-33, 257 Wis. 2d 809, 652 N.W.2d 806 
(negligent and strict responsibility misrepresentation); Home 
Valu, 
Inc. 
v. 
Pep 
Boys, 
213 
F.3d 
960, 
964 
(7th 
Cir. 
2000)(intentional, 
negligent, 
and 
strict 
responsibility 
misrepresentation); Cooper Power Systems, Inc. v. Union Carbide 
Chems. & Plastics Co., Inc., 123 F.3d 675, 682 (7th Cir. 
1997)(intentional misrepresentation); Badger Pharmacal, Inc. v. 
Colgate-Palmolive Co., 1 F.3d 621, 628 (7th Cir. 1993)(negligent 
and strict responsibility misrepresentation). 
¶30 
Applying 
the 
economic 
loss 
doctrine 
to 
misrepresentation 
claims 
furthers 
the 
doctrine's 
central 
purpose: 
Where there are well-developed contractual remedies, 
such as the remedies that the Uniform Commercial Code 
(in force in all U.S. states) provides for breach of 
warranty of the quality, fitness, or specifications of 
goods, there is no need to provide tort remedies for 
misrepresentation.  The tort remedies would duplicate 
the contract remedies, adding unnecessary complexity 
to the law.  Worse, the provision of these duplicative 
tort remedies would undermine contract law.  
No. 
02-1034   
 
16 
 
All-Tech Telecom, 174 F.3d 862, 865 (7th Cir. 1999).  Thus, 
"misrepresentations such as these, that ultimately concern the 
quality of the product sold, are properly remedied through 
claims for breach of warranty."  Cooper Power Systems, 123 F.3d 
at 682. 
¶31  We cited generally to the foregoing line of federal 
appellate opinions in last term's decision in Digicorp, 262 
Wis. 2d 32, 
¶¶43-45. 
Digicorp 
presupposed 
the 
general 
applicability of the economic loss doctrine to misrepresentation 
claims; the case tested the continued viability of the court of 
appeals' decision in Douglas-Hanson Co., Inc. v. BF Goodrich 
Co., 229 Wis. 2d 132, 598 N.W.2d 262 (Ct. App. 1999), which had 
recognized an exception to the economic loss doctrine for claims 
of intentional fraud-in-the-inducement of a contract.3  Also at 
issue in Digicorp was an alternative to Douglas-Hanson's broad 
fraud exception to the economic loss doctrine: the so-called 
Huron Tool claim, based on the Michigan case of Huron Tool and 
Engineering Co. v. Precision Consulting Services, Inc., 532 
N.W.2d 541 (Mich. Ct. App. 1995), which recognized a narrow 
fraud-in-the-inducement cause of action for misrepresentations 
"extraneous to" and not "interwoven with" the subject matter of 
the contract. 
                                                 
 
3   We accepted review of Douglas-Hanson Co. v. BF Goodrich 
Co., 229 Wis. 2d 132, 598 N.W.2d 262 (Ct. App. 1999), but 
divided evenly, with one justice not participating, resulting in 
a summary affirmance.  Douglas-Hanson Co. v. BF Goodrich Co., 
2000 WI 22, 233 Wis. 2d 276, 607 N.W.2d 621. 
  
No. 
02-1034   
 
17 
 
¶32  Two justices did not participate in Digicorp, however, 
and the five members of the court who decided the case divided 
2-1-2 on the issue of a fraud-in-the-inducement exception to the 
economic loss doctrine.  Digicorp, 262 Wis. 2d 32, ¶5 n.2 
(Crooks, J., lead opinion, joined by Prosser, J.); ¶82 n.3 
(Sykes, J., concurring in part, dissenting in part); ¶85 
(Bradley, J., dissenting, joined by Bablitch, J.).  A majority 
of the justices participating——Justices Crooks, who authored the 
lead opinion, joined by Justice Prosser and this writer——
overruled Douglas-Hanson Co. to the extent that it recognized a 
broad exception to the economic loss doctrine for all claims of 
fraud-in-the-inducement 
of 
a 
contract. 
 
Digicorp, 
262 
Wis. 2d 32, ¶51. 
¶33  Two members of the Digicorp majority, Justices Crooks 
and Prosser, announced their recognition of a narrow Huron Tool-
type cause of action as an exception to the economic loss 
doctrine.  Id. at ¶¶3, 5 n.2, 51.  This writer dissented from 
that part of the lead opinion, concluding that a fraud-in-the-
inducement 
exception 
to 
the 
economic 
loss 
doctrine 
was 
unnecessary and inappropriate, because contract remedies at law 
and in equity for contracts fraudulently induced were adequate.  
Id. at ¶¶73-83 (Sykes, J., concurring in part, dissenting in 
part).  The three-justice majority reversed the judgment, 
agreeing that the facts of the case were insufficient to satisfy 
even a narrow, Huron Tool-type claim.  Id., ¶¶62, 82. 
¶34  Justice Bradley dissented in Digicorp, joined by 
Justice Bablitch; the dissenters rejected Huron Tool, and would 
No. 
02-1034   
 
18 
 
have maintained Douglas-Hanson in its entirety.  Id., ¶¶84-91.  
Thus, while a majority of the justices participating in Digicorp 
overruled Douglas-Hanson, and a separate majority announced a 
willingness to allow some type of fraud-in-the-inducement tort 
as an exception to the economic loss doctrine, three of the five 
justices participating (albeit different sets of three) rejected 
both Douglas-Hanson and Huron Tool.  Accordingly, Digicorp did 
not 
produce 
the 
majority 
agreement 
necessary 
for 
the 
authoritative recognition of an element-specific fraud-in-the-
inducement tort cause of action as an exception to the economic 
loss doctrine. 
 
¶35  This case does not present an opportunity to determine 
whether a Huron Tool-type cause of action as an exception to the 
economic loss doctrine would be recognized by a majority of this 
court.  The fraud alleged here plainly pertains to the character 
and quality of the goods that are the subject matter of the 
contract. 
¶36  As such, the plaintiffs have warranty remedies for the 
alleged defects in their motorcycles.  In addition, there are 
contract remedies at law and in equity to the extent that the 
plaintiffs 
were 
fraudulently 
induced 
to 
purchase 
their 
motorcycles.  A contract fraudulently induced is void or 
voidable; a party fraudulently induced to enter a contract may 
affirm the contract and seek damages for breach or pursue the 
equitable remedy of rescission and seek restitutionary damages, 
including sums necessary to restore the party fraudulently 
induced to his position prior to the making of the contract.  
No. 
02-1034   
 
19 
 
First Nat'l Bank & Trust Co. of Racine v. Notte, 97 Wis. 2d 207, 
225, 293 N.W.2d 530 (1980); Eklund v. Koenig & Assocs., 153 Wis. 
2d 374, 381, 451 N.W.2d 150 (Ct. App. 1989); Head & Seemann, 
Inc. v. Gregg, 104 Wis. 2d 156, 166-67, 311 N.W.2d 667 (Ct. App 
1981).  The economic loss doctrine does not bar these contract 
remedies for fraudulently induced contracts.  See Harley-
Davidson Motor Co v. Powersports, Inc., 319 F.3d 973, 978 n.7 
(7th Cir. 2003)(collecting Wisconsin cases). 
¶37  In short, we see no reason to recognize an exception 
to the economic loss doctrine to allow this consumer contract 
dispute to be remedied as an intentional misrepresentation tort.  
The economic loss doctrine bars the plaintiffs' common-law fraud 
claim.  The plaintiffs may have contract remedies——breach of 
contract/warranty or rescission and restitution——but may not 
pursue a tort claim for misrepresentation premised on having 
purchased allegedly defective motorcycles.                 
B.  DTPA Claim 
 
¶38 The 
plaintiffs' 
statutory 
claim 
is 
based 
on 
Wisconsin's 
Deceptive 
Trade 
Practices 
Act, 
Wis. 
Stat. 
§ 100.18(1), which generally prohibits false, deceptive, or 
misleading representations or statements of fact in public 
advertisements or sales announcements.  The DTPA provides, in 
pertinent part: 
No person, firm, corporation or association, or agent 
or employee thereof . . . with intent to induce the 
public in any manner to enter into any contract or 
obligation relating to the purchase, sale, hire, use 
or 
lease 
of 
any 
 . . . merchandise . . . shall 
make . . . an advertisement, announcement, statement 
No. 
02-1034   
 
20 
 
or 
representation 
of 
any 
kind 
to 
the 
public . . . which 
advertisement, 
announcement, 
statement or representation contains any assertion, 
representation or statement of fact which is untrue, 
deceptive or misleading. 
Wis. Stat. § 100.18(1)(emphasis added).  The DTPA provides a 
private cause of action for persons suffering a pecuniary loss 
as a result of a violation of the statute: 
Any person suffering pecuniary loss because of a 
violation of this section by any other person may sue 
in any court of competent jurisdiction and shall 
recover such pecuniary loss, together with costs, 
including reasonable attorney fees. 
Wis. Stat. § 100.18(11)(b)2.   
¶39 Under the terms of the statute, a plaintiff asserting 
a DTPA claim must allege that the defendant has, with the 
specified 
intent, 
made 
an 
"advertisement, 
announcement, 
statement or representation . . . to the public," which contains 
an "assertion, representation or statement of fact" that is 
"untrue, deceptive or misleading," and that the plaintiff has 
sustained a pecuniary loss as a result of the "assertion, 
representation or statement of fact."  Wis. Stat. § 100.18(1); 
see also Wis JI——Civil 2418. 
¶40  As we have noted, the plaintiffs' case is premised 
primarily on the allegation that Harley failed to disclose the 
alleged motorcycle engine defect.  A nondisclosure is not an 
"assertion, representation or statement of fact" under Wis. 
Stat. 
§ 
100.18(1). 
 
Silence——an 
omission 
to 
speak——is 
insufficient to support a claim under Wis. Stat. § 100.18(1).  
The DTPA does not purport to impose a duty to disclose, but, 
No. 
02-1034   
 
21 
 
rather, prohibits only affirmative assertions, representations, 
or statements of fact that are false, deceptive, or misleading.4  
To 
permit 
a 
nondisclosure 
to 
qualify 
as 
an 
actionable 
"assertion, representation or statement of fact" under Wis. 
Stat. § 100.18(1) would expand the statute far beyond its terms.   
                                                 
4 Our research has identified no appellate decision in which 
a claim under the DTPA was allowed to go forward on the basis of 
anything other than an affirmative statement or representation.  
For example, in Tim Torres Enterprises v. Linscott, 142 
Wis. 2d 56, 416 N.W.2d 670 (Ct. App. 1987), the court of appeals 
upheld a verdict under Wis. Stat. § 100.18(1) where a retailer 
had deceptively represented in signs and a flier that his 
establishment was the only place a certain frozen custard was 
available.  Id. at 68-69.  Similarly, in Grube v. Daun, 173 
Wis. 2d 30, 496 N.W.2d 106 (Ct. App. 1992), the court of appeals 
reinstated a claim under the statute premised on a real estate 
broker's "affirmative representations" that the seller had no 
knowledge of defects in the property.  Id. at 59.  These cases 
are representative only; we have discovered no case upholding a 
DTPA claim premised on a nondisclosure.  The dissent reads Grube 
as supporting a conclusion that nondisclosures or omissions are 
actionable under the DTPA.  The dissent's reasoning is as 
follows: the case involved several common law misrepresentation 
claims and a DTPA claim, premised upon a course of conduct that 
included both affirmative misrepresentations and nondisclosures.  
Dissent, ¶37 n.52.  Therefore, according to the dissent, the 
court of appeals "apparently" used the term "misrepresentation" 
interchangeably in its opinion to refer to both affirmative 
misrepresentations and nondisclosures, in connection with the 
common law claims and the DTPA claim.  Id.  This is not a sound 
argument from precedent.  In its discussion of the plaintiffs' 
DTPA claim, the court of appeals in Grube never referenced 
nondisclosures 
or 
omissions, 
but, 
rather, 
used 
the 
term 
"representations" or "misrepresentations."  Id. at 57-59.  The 
court specifically referred to nondisclosures elsewhere in its 
opinion when it analyzed the plaintiffs' common law claims.  
Certainly if the court of appeals in Grube was affirmatively 
holding 
that 
a 
DTPA 
claim 
was 
actionable 
based 
upon 
nondisclosures or omissions, it would have said so explicitly.      
  
No. 
02-1034   
 
22 
 
¶41  To the extent that the amended complaint alleges any 
affirmative assertions, they are mere commercial "puffery" and 
hence legally insufficient to support a claim under the statute.  
Puffery has been defined as "the exaggerations reasonably to be 
expected of a seller as to the degree of quality of his product, 
the truth or falsity of which cannot be precisely determined."  
State v. American TV, 146 Wis. 2d 292, 301-02, 430 N.W.2d 709 
(1988) (quoting Better Living, Inc. et al., 54 F.T.C. 648, 653 
(1957), aff'd., 259 F.2d 271 (3d Cir. 1958)).  See also Loula v. 
Snap-On Tools Corp., 175 Wis. 2d 50, 54, 498 N.W.2d 866 (Ct. 
App. 1993)(statement that a tool dealer would make as much money 
as a doctor or lawyer was an exaggeration, "the truth or falsity 
of which cannot be precisely determined," and "so vague and 
indefinite that it amounts to nothing more than mere puffery," 
nonactionable at common law as a misrepresentation.) 
¶42  In American TV, we held that "[a] general statement 
that 
one's 
products 
are 
best 
is 
not 
actionable 
as 
a 
misrepresentation of fact" and could not support a claim under 
Wis. Stat. § 100.18.  American TV, 146 Wis. 2d at 302.  We also 
concluded that the characterization of a product as "the finest" 
and a sale as a "clearance" or "closeout" were "merely examples 
of hyperbole and puffery," insufficient to state a claim under 
the DTPA.  Id. at 299. 
¶43 Similarly here, the affirmative statements identified 
in the amended complaint constitute fairly obvious examples of 
puffery.  Harley is alleged to have advertised the TC-88 as "a 
No. 
02-1034   
 
23 
 
masterpiece," of "premium quality," and "filled to the brim with 
torque and ready to take you thundering down the road." 
¶44  "Premium quality" equates to "the best," and is 
squarely within the puffery definition of American TV.  The term 
"masterpiece" is arguably more precise than "the best," insofar 
as it connotes a specific engineering achievement, but this does 
not move the term out of the domain of puffery.  One reason for 
excluding 
commercial 
puffs 
from 
the 
scope 
of 
actionable 
misrepresentations is that they are "not capable of being 
substantiated or refuted," id. at 302 (quoting Sterling Drug, 
Inc., 102 F.T.C. 395, 752 (1983)), and a factfinder would have 
as little hope of determining whether the TC-88 was indeed "a 
masterpiece" as it would of determining whether it was simply 
"the best."  Harley's statement that the TC-88 is "filled to the 
brim with torque and ready to take you thundering down the road" 
lacks even the minimal linguistic specificity required to make 
it amenable to proof or refutation, however entertaining the 
attempt might prove to be. 
¶45  Accordingly, because a nondisclosure is not an 
"assertion, representation or statement of fact" for purposes of 
the DTPA, and because the only affirmative assertions alleged in 
the amended complaint are mere puffery, the plaintiffs have 
failed to state a claim under Wis. Stat. § 100.18.        
By the Court.— The decision of the Court of Appeals is 
reversed.  
¶46 ANN WALSH BRADLEY, J., withdrew from participation.   
  
No. 
02-1034   
 
24 
 
 
 
No.  02-1034.ssa 
 
1 
 
 
¶47 SHIRLEY S. ABRAHAMSON, C.J.   (dissenting).  Because I 
conclude that the majority opinion has gone too far in expanding 
the scope of the economic loss rule and the puffery doctrine, I 
dissent. 
¶48 This case comes to us on a motion to dismiss a 
complaint.  The plaintiffs in this case seek relief on two 
grounds.  First, the plaintiffs assert a common-law fraudulent 
misrepresentation and concealment claim against Harley-Davidson, 
contending that Harley-Davidson knew about and failed to 
disclose a defect in the cam bearing mechanism of certain 
motorcycles it sold.  The majority opinion dismisses this claim 
under the economic loss doctrine, arguing that the plaintiffs 
are not entitled to pursue tort recovery for purely economic 
losses arising out of their contractual relationship with 
Harley-Davidson.5   
¶49 Second, the plaintiffs assert that Harley-Davidson 
violated Wisconsin's Deceptive Trade Practices Act (DTPA), 
Wis. Stat. § 100.18(1), 
when 
it 
intentionally 
and 
falsely 
represented that motorcycles equipped with the faulty mechanism 
were of a particular standard of quality and suitable for safe, 
long-distance use.  The majority opinion dismisses the second 
claim on two theories: (1) that a nondisclosure, as opposed to 
an affirmative assertion, is insufficient to support a claim 
                                                 
5 Majority op., ¶20.  The economic loss doctrine does not 
apply to Wis. Stat. § 100.18 claims.  Kailin v. Armstrong, 2002 
WI App 70, ¶¶2, 42, 43, 252 Wis. 2d 676, 643 N.W.2d 132. 
No.  02-1034.ssa 
 
2 
 
under Wis. Stat. § 100.18(1);6 and (2) that the affirmative 
assertions are commercial puffery, legally insufficient to 
support a claim under the statute.7 
¶50 The majority opinion falters in denying both claims. 
As to the common law intentional misrepresentation claim, the 
majority opinion pushes the economic loss rule beyond reasonable 
limits.  As to the statutory claim, the majority opinion crafts 
a meaningless distinction between affirmative assertions and 
nondisclosures 
and 
undermines 
the 
purpose 
of 
Wis. Stat. § 100.18(1) 
by 
treating 
Harley-Davidson's 
representations as puffery.  I discuss each of these problems 
with the majority opinion in turn. 
I 
¶51 As to the common law intentional misrepresentation 
claim, sometimes referred to herein as fraud, the majority 
opinion delivers good news to the plaintiffs, but ultimately 
delivers more bad news than good.   
¶52 After ten paragraphs of bad news dicta describing why 
this case is a no-injury case and explaining that diminished 
value premised upon a mere possibility of future product failure 
is too speculative and uncertain to support an intentional 
misrepresentation 
claim,8 
the 
majority 
opinion 
gives 
the 
                                                 
6 Majority op., ¶40. 
7 Id., ¶43. 
8 Id., ¶¶12-21. 
No.  02-1034.ssa 
 
3 
 
plaintiffs some good news:  the amended complaint is sufficient 
to state a more particularized allegation of damage.9    
¶53 Then comes the ultimate bad news.  The economic loss 
rule 
bars 
the 
plaintiffs' 
common 
law 
intentional 
misrepresentation claim.10   
¶54 In reaching this result, however, the majority opinion 
seeks to avoid determining the nature of a fraud in the 
inducement exception to the economic loss rule applicable in 
Wisconsin.  It states that "[t]his case does not present an 
opportunity to determine whether a Huron Tool-type cause of 
action as an exception to the economic loss doctrine would be 
recognized by a majority of this court."11   
¶55 The majority opinion asserts that it is irrelevant to 
determine the existence or scope of a fraud in the inducement 
exception because even adopting the "interwoven with" Huron 
Tool12 fraud in the inducement test, "[t]he fraud alleged here 
                                                 
9 Id., ¶22.  The plaintiffs' brief explains at great length 
the 
difference 
between 
no-injury 
cases 
involving 
a 
malfunctioning product and fraud claims seeking benefit of the 
bargain damages.  
10 Harley-Davidson raised the economic loss issue for the 
first time in its petition for review to this court.  The 
general rule in this state is that matters not raised in the 
circuit court are deemed waived on appeal.  State v. Holland 
Plastics Co., 111 Wis. 2d 497, 504, 331 N.W.2d 320 (1983).  This 
rule is one of administration, however, and this court may 
nevertheless consider issues not raised below on appeal as a 
matter of right.  Brown County v. Dep't of Health & Social 
Servs., 103 Wis. 2d 37, 42, 307 N.W.2d 247 (1981). 
11 Majority op., ¶35 
12 Huron Tool & Eng'g Co. v. Precision Consulting Servs., 
532 N.W.2d 541, 546 (Mich. Ct. App. 1995). 
No.  02-1034.ssa 
 
4 
 
plainly pertains to the character and quality of the goods that 
are the subject matter of the contract."13  "In other words," 
asserts the majority opinion, "we see no reason to recognize an 
exception to the economic loss doctrine to allow this consumer 
contract 
dispute 
to 
be 
remedied 
as 
an 
intentional 
misrepresentation tort."14  
¶56 I disagree with the majority opinion that this issue 
can be avoided.  The plaintiffs in this case argue that the 
alleged intentional misrepresentation occurred prior to entering 
into their purchase of the motorcycles.  This type of fact 
situation was one explicitly contemplated by the lead opinion in 
Digicorp to provide an exception to the economic loss rule.15  I 
conclude that resolving the breadth of the fraud in the 
inducement exception to the economic loss rule is an essential 
aspect of this case.  I therefore proceed to consider the scope 
of the exception.  A brief historical review of the development 
of the fraud exception will assist in this endeavor.  
¶57 Courts have taken 
three 
different 
approaches in 
determining the scope of a fraud in the inducement exception to 
the economic loss rule.  In some jurisdictions, no exception is 
recognized, at least in the context of U.C.C. claims, to the 
                                                 
13 Id., ¶35. 
14 Id., ¶37. 
15 Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶52, 262 
Wis. 2d 32, 662 N.W.2d 652. 
No.  02-1034.ssa 
 
5 
 
economic loss rule at all.16  At least one justice of this court 
has favored this approach.17   
¶58 In contrast, many courts "recognize that fraud [in the 
inducement of a contract] can be an exception to the economic 
loss rule."18  The theory behind a fraud in the inducement 
exception to the economic loss rule is that contracts entered 
into under false pretenses cannot promote the proper ordering of 
risks 
and 
responsibilities 
between 
parties. 
 
One 
court 
articulated this reasoning as follows: 
[C]ontract negotiations that begin with the assumption 
that the other party is lying will hardly encourage 
free 
and 
open 
bargaining. 
 
The 
specific 
duty 
encompassed by fraud in the inducement is the duty of 
the parties entering into the contract to speak 
honestly regarding negotiated terms.  How can parties 
freely allocate risk if they cannot rely on the 
opposite party to speak truthfully during negotiations 
                                                 
16 See Flagg Energy Dev. Corp. v. General Motors Corp., 709 
A.2d 1075, 1088 (Conn. 1998) (a plaintiff's claim of fraudulent 
inducement to purchase a defective product procured under the 
U.C.C. was invalid on the ground that such a claim was 
inconsistent with the exclusive remedies provided by the 
U.C.C.).  Others conclude that the U.C.C. does not restrict a 
party from pursuing fraud and misrepresentation claims arising 
out of a dispute over the sale of goods.  See Steven C. Tourek 
et al., Bucking the "Trend": The Uniform Commercial Code, the 
Economic Loss Doctrine, and Common Law Causes of Action for 
Fraud and Misrepresentation, 84 Iowa L. Rev. 875, 878-84, 918 
(1999). 
17 Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, ¶76, 262 
Wis. 2d 32, 662 N.W.2d 652 (Sykes, J., concurring in part, 
dissenting in part). 
18 R. Joseph Barton, Drowning in a Sea of Contract: 
Application of the Economic Loss Rule to Fraud and Negligent 
Misrepresentation Claims, 41 Wm. & Mary L. Rev. 1789, 1831 
(2000). 
No.  02-1034.ssa 
 
6 
 
regarding the subject matter of the contract——if they 
cannot tell what is a lie and what is not?19 
¶59 Relying on this analysis, a number of jurisdictions, 
such as California, Illinois, and Texas, have recognized a fraud 
in the inducement exception to the economic loss rule.20  The 
Wisconsin Court of Appeals adopted such an exception in Douglas-
Hanson Co., Inc. v. BF Goodrich Co., 229 Wis. 2d 132, 138-39, 
598 N.W.2d 262 (Ct. App. 1999), holding that "the economic loss 
doctrine does not preclude a plaintiff's claim for intentional 
misrepresentation 
when 
the 
misrepresentation 
fraudulently 
induces a plaintiff to enter into the contract."  According to 
the court of appeals, a fraud in the inducement exception to the 
economic loss rule is appropriate for a number of reasons.  
Intentional misrepresentations undermine the ability of parties 
to negotiate freely.21  Sound public policy supports placing the 
burden of loss resulting from a misrepresentation on the seller, 
who caused the loss and is best situated to assess and allocate 
the risk, rather than upon the buyer.22  Two justices of this 
court have favored this approach.23  I agree with this approach. 
                                                 
19 Budgetel Inns, Inc. v. Micros Sys., Inc., 8 F. Supp. 2d 
1137, 1148 (E.D. Wis. 1998) 
20 See, e.g., Formosa Plastics Corp. USA v. Presidio Eng'rs 
& Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998); Khan v. 
Shiley Inc., 266 Cal. Rptr. 106, 112 (Cal. Ct. App. 1990); 
Moorman Mfg. Co. v. Nat'l Tank Co., 435 N.E.2d 443, 452 (Ill. 
1982). 
21 Douglas-Hanson Co., Inc. v. BF Goodrich Co., 229 Wis.2d 
132, 144-45, 598 N.W.2d 262 (Ct. App. 1999). 
22 Id. at 145-46. 
23 Justices Bradley and Bablitch advocated the "broad" 
exception.  Digicorp, 262 Wis. 2d 32, ¶86. 
No.  02-1034.ssa 
 
7 
 
¶60 A third category of jurisdictions, such as Michigan 
and Florida, have adopted a narrower fraud in the inducement 
exception, adopting the reasoning of the Michigan Court of 
Appeals in Huron Tool & Engineering Co. v. Precision Consulting 
Services, 532 N.W.2d 541 (Mich. Ct. App. 1995).  Although the 
Michigan court recognized a fraud in the inducement exception to 
the economic loss rule, it added the additional caveat that a 
complainant may bring an intentional misrepresentation claim 
only if it is extraneous to the alleged breach of contract.24  In 
other words, the intentional misrepresentation claim must be 
factually 
distinguishable 
from 
the 
contract; 
the 
misrepresentation cannot be interwoven or intertwined with the 
subject matter of the contract.25   
¶61 The Huron Tool rule has resulted in conflicting views 
about 
what 
constitutes 
an 
intentional 
misrepresentation 
"extraneous to" or "interwoven with" a contract.  Some courts 
have "taken the view that the issue is strictly temporal."26  
That is, if the intentional misrepresentation occurs prior to 
the execution of the contract, it is extraneous to the contract 
and excepted from the economic loss rule.  Other courts have 
taken 
the 
view 
that 
the 
timing 
of 
the 
intentional 
misrepresentation 
is 
not 
as 
important 
as 
"a 
substantive 
                                                 
24 Huron Tool, 532 N.W.2d at 546. 
25 Id. at 545. 
26 Paul J. Schwiep, Fraudulent Inducement Claims Should 
Always be Immune From Economic Loss Rule Attack, Fla. B.J., Apr. 
2001, at 22, 24. 
No.  02-1034.ssa 
 
8 
 
comparison of the allegedly fraudulent statements against the 
contract's provisions."27  Two justices of this court have 
advocated some version of the Huron Tool rule.28 
¶62 The Huron Tool "extraneous to, interwoven with" test 
has proved to be 
nightmarish in 
its 
application. 
 One 
commentator remarked that "application of the 'interwoven' test 
has been impossible.  A Ouija board could just as accurately 
predict the results.  The analysis is 'murky' and the approach 
has produced 'conflicting opinions, even within the same 
district courts of appeal.'  Further, the 'interwoven' analysis 
is, in theory, 'so broad that it swallows the exception 
whole.'"29  Another commentator opined that "the practical effect 
of the additional requirement [that the fraud be extraneous to 
the contract] has rendered the exception a nullity."30 
¶63 As I have stated, each of these approaches to the 
fraud in the inducement exception has had an advocate in this 
court.  In Digicorp, Inc. v. Ameritech Corp., 2003 WI 54, 262 
Wis. 2d 32, 662 N.W.2d 652,31 three participating justices (JJ. 
Crooks, Prosser, and Sykes) rejected the Douglas-Hanson fraud in 
                                                 
27 Id. 
28 Digicorp, 262 Wis. 2d 32, ¶21 (Crooks, J., and Prosser, 
J.).   
29 Schwiep, supra note 26, at 27. See also Digicorp, 262 
Wis. 2d 32, ¶¶86-89 (Bradley, J., dissenting). 
30 Barton, supra note 18, at 1808. 
31 Majority op., ¶31. 
No.  02-1034.ssa 
 
9 
 
the inducement exception to the economic loss rule.32  Four 
participating justices (JJ. Crooks, Prosser, Bablitch, and 
Bradley) agreed in Digicorp that some fraud in the inducement 
exception to the economic loss rule exists, but the four divided 
equally about what the fraud in the inducement exception 
entailed.33   
¶64 I agree with the four justices of the Digicorp court 
holding that there should be a fraud in the inducement exception 
to the economic loss rule.  I would conclude, as did Justices 
Bablitch and Bradley in Digicorp, that a fraud in the inducement 
exception as articulated by the court of appeals in Douglas-
Hanson is a good rule.  But either under the Douglas-Hanson rule 
or at least some version of the Huron Tool rule, I conclude that 
                                                 
32 Digicorp, Inc. v. Ameritech Corp., 262 Wis. 2d 32, ¶5 
n.2.  
33 Id., ¶5 n.2.   
Harley-Davidson contends that the Digicorp court held that 
where an alleged misrepresentation inducing a contract concerns 
the quality or characteristics of a product that is the subject 
matter of the contract, the economic loss rule bars any tort 
claim premised upon the misrepresentation.  Harley-Davidson 
argues that this court adopted the rule set forth in Huron Tool 
that 
the 
economic 
loss 
doctrine 
bars 
tort 
claims 
for 
misrepresentation that are "interwoven" with the terms of the 
contract, but permits tort claims for a misrepresentation that 
induces a contract if the misrepresentation is unrelated to the 
express or implied terms of a contract.  Harley-Davidson errs.  
As the majority opinion explains, "three of five justices 
participating [in Digicorp] (albeit different sets of three) 
rejected both Douglas-Hanson and Huron Tool."  Majority op., 
¶34. 
A three-justice Digicorp majority decided that the facts of 
the case were insufficient to satisfy the Huron Tool exception. 
No.  02-1034.ssa 
 
10 
 
the plaintiffs in the present case should survive a motion to 
dismiss their complaint. 
¶65 The 
plaintiffs 
allege 
that 
Harley-Davidson 
misrepresented the quality of the TC-88 engines prior to the 
plaintiffs' decision to purchase motorcycles containing the 
malfunctioning engines.  They allege that Harley-Davidson knew 
that "all of the motorcycles with the TC-88s are defective and 
will prematurely fail."  These allegations satisfy at least one 
formulation of the Huron Tool test set forth in the lead opinion 
in Digicorp:  "[I]n order for the fraud in the inducement 
exception to apply, the misrepresentation would have [to have] 
occurred before the formation of the contract.  In addition, to 
constitute . . . intentional 
misrepresentation, 
a 
plaintiff 
would have to prove the five elements set forth in the case law 
and in Wisconsin Civil Jury Instruction 2401."34    
¶66 An understanding of the principles and rationales 
underlying the economic loss rule serves to clarify when the 
rule should be applied.35  The economic loss rule's stated 
purposes are to maintain the distinction between tort law and 
                                                 
34 Digicorp, 262 Wis. 2d 32, ¶52. 
35 Northridge Co. v. W.R. Grace & Co., 162 Wis. 2d 918, 933, 
471 N.W.2d 179 (1991) (the principles and policy distinguishing 
between tort and contract actions determine into which category 
a complainant's alleged injury fits). 
No.  02-1034.ssa 
 
11 
 
contract law,36 to protect freedom of contract, and to encourage 
the party best situated to assess the risk of economic loss and 
to insure against, assume, or allocate the loss.37  In my 
opinion, the majority opinion's failure to recognize the 
intentional 
misrepresentation 
claim 
in 
the 
present 
case 
undermines these purposes.38 
                                                 
36 The 
boundary 
between 
contract 
and 
tort 
is 
often 
indistinct.  "[W]hen parties to a contract are disputing, tort 
and contract overlap, making it difficult to draw a clear 
distinction between the two."  Brooks v. Hayes, 133 Wis. 2d 228, 
246, 395 N.W.2d 167 (1986) (citing treatises, articles and cases 
discussing the overlap between contract and tort law).  See also 
State Farm Mut. Auto. Ins. Co. v. Ford Motor Co., 225 
Wis. 2d 305, 318-19 (1999) (the boundary between tort and 
contract 
law 
has 
moved 
in 
the 
direction 
of 
protecting 
consumers).  See Grant Gilmore, The Death of Contract (1974). 
37 For a discussion of the purposes of the economic loss 
rule, see Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 
Wis. 2d 395, 400-09, 573 N.W.2d 842 (1998).  For a fuller 
discussion of the reasons for the economic loss doctrine, see 
All-Tech Telecom, Inc. v. Amway Corp., 174 F.3d 862, 865-67 (7th 
Cir. 1999); Barton, supra note 18, at 1796-1800.  
38 For 
a 
discussion 
that 
barring 
intentional 
misrepresentation claims under the economic loss rule undermines 
the purposes of the rule, see Digicorp, 262 Wis. 2d 32, ¶¶89-92 
(Bradley, J., dissenting). 
No.  02-1034.ssa 
 
12 
 
¶67 These purposes undergirding the economic loss rule 
evolved in the context of commercial transactions in which 
parties 
contracted 
for 
goods 
at 
arm's 
length. 
 
Such 
circumstances are distinct from situations in which consumers 
who are not engaged in business enter into contracts for goods.39   
¶68 Adapting 
the 
economic 
loss 
rule 
to 
consumer 
transactions requires an evaluation of the economic loss rule 
and its underpinnings in light of the facts of a particular 
situation.  While this court has recognized that the economic 
loss rule can apply to consumer transactions,40 it is not clear 
that it should apply to fraud in the inducement claims involving 
consumer transactions.  I conclude that the allegation of 
                                                                                                                                                             
Fraud is a special circumstance not within the purpose of 
the economic loss doctrine.  The economic loss doctrine 
developed because of "concern about extending liability ad 
infinitum for the consequences of a negligent act."  Robert L. 
Rabin, Tort Recovery for Negligently Inflicted Economic Loss: A 
Reassessment, 37 Stan. L. Rev. 1513, 1526 (1985) (emphasis 
added). 
See, 
e.g., 
Ollerman 
v. 
O'Rourke 
Co., 
Inc., 
94 
Wis. 2d 17, 48-51, 288 N.W.2d 95 (1980) (courts are reluctant to 
impose liability in negligence actions for misrepresentation 
causing pecuniary loss not resulting from bodily harm or 
physical damage to property, because defendants are exposed to 
wide liability); Daanen & Janssen, 216 Wis. 2d at 400 (the 
"economic loss doctrine is a judicially created doctrine 
providing that a commercial purchaser of a product cannot 
recover from a manufacturer, under the tort theories of 
negligence or strict products liability, damages that are solely 
'economic' in nature."). 
39 All-Tech Telecom, Inc. v. Amway Corp., 174 F.3d 862, 866 
(7th Cir. 1999). 
40 State Farm Mut. Auto. Ins. Co. v. Ford Motor Co., 225 
Wis. 2d 305, 311-12, 592 N.W.2d 201 (1999) (holding "that the 
economic loss doctrine applies to consumer transactions and bars 
State Farm's tort claims for purely economic loss."). 
No.  02-1034.ssa 
 
13 
 
intentional misrepresentations in the case at bar is, at the 
very least, sufficient to withstand a motion to dismiss for 
failing to state a claim.   
¶69 Allowing a fraud in the inducement exception to the 
economic loss rule for intentional false statements made prior 
to a contract in a consumer purchase preserves a distinction 
between tort law and contract law and fosters the values of 
each.41  It maintains the value of contract by ensuring that 
consumers are in a position to make intelligent decisions in 
allocating the risk of loss, thereby increasing the likelihood 
that losses can be resolved in contract.  It furthers the 
purposes of tort law by sustaining a financial deterrent for 
those who intentionally misrepresent their goods.   
¶70 A fraud in the inducement exception to the economic 
loss rule for intentional false statements made to consumers is 
founded on the tort of intentional misrepresentation, a tort 
action protecting intangible economic interests.  This tort 
action is separate and distinct from the duty created solely by 
                                                 
41 For a court adopting an intentional misrepresentation 
exception to the economic loss rule, see Moorman Mfg. Co. v. 
Nat'l Tank Co., 435 N.E.2d 443, 452 (Ill. 1982).   
For a discussion of the desirability of allowing recovery 
in intentional misrepresentation versus contract, see Barton, 
supra note 18, at 1825-29 (contract and tort claims are 
fundamentally different and serve complementary but distinct 
purposes; 
these 
differences 
should 
inform 
the 
correct 
application of the economic loss rule to misrepresentation).  
No.  02-1034.ssa 
 
14 
 
contract.42  "[T]he interest protected by fraud is a plaintiff's 
right to justifiably rely on the truth of a defendant's factual 
representation in a situation where an intentional lie would 
result in loss to the plaintiff."43  An overextension of the 
economic loss rule drowns fraudulent misrepresentation claims in 
a sea of contract.44  
¶71 What kind of "freedom of contract" and "ability to 
assess and insure against the risk" is being fostered or 
protected when a party to a contract commits an intentional tort 
in inducing a contract that causes monetary loss to another 
party?  On what basis can we say that an individual consumer 
does not need the tort remedy of intentional misrepresentation 
against a manufacturer?45  The answer to both questions is none.46 
                                                 
42 The 
five 
elements 
of 
intentional 
misrepresentation 
(fraud) are: (1) the defendant made a misrepresentation of fact; 
(2) the representation was untrue; (3) the defendant knew the 
representation was untrue or made it recklessly; (4) the 
representation was made with intent to deceive and induce the 
plaintiff to act upon it to the plaintiff's pecuniary damage; 
and (5) the plaintiff believed the representation to be true and 
relied on it.  Wis JI——Civil 2401 (2002). 
43 Woodson v. Martin, 663 So. 2d 1327, 1330 (Fla. 1995) 
(Altenbernd, J., dissenting). 
44 See Barton, supra note 18, at 1843 (2000). 
In East River Steamship Corp. v. Transamerica Delaval, 
Inc., 476 U.S. 858, 866 (1986), the United States Supreme Court 
used the sea/drowning metaphor as follows:  "It is clear, 
however, that if this development [of products liability] were 
allowed to progress too far, contract law would drown in a sea 
of tort." 
45 See, e.g., Thompson v. Neb. Mobile Homes Corp., 647 P.2d 
334, 337 (Mont. 1982) (voicing skepticism of ability of warranty 
law to protect the consumer). 
No.  02-1034.ssa 
 
15 
 
 
¶72 These questions are never addressed by the majority 
opinion, however, because it simply asserts that the economic 
loss doctrine bars this intentional misrepresentation tort 
because there is a remedy for the plaintiffs in contract.   
¶73 The 
majority opinion 
announces an 
outcome 
today 
without announcing a rule of law.  The scope of the fraud in the 
inducement exception to the economic loss rule remains for 
another day.47 
¶74 Treating the complaint's allegations as true, as we 
must do in a motion to dismiss, I conclude that the plaintiffs 
have stated a claim for fraud in the inducement of the contract, 
whether under Huron Tool or Douglas-Hanson.  Whether the 
plaintiffs ultimately prevail in their claim is a question to be 
determined at trial, not on a motion to dismiss.   
II 
¶75 I am also unpersuaded by the majority opinion's 
conclusion that the plaintiffs in this case are not entitled to 
proceed with their claim under Wis. Stat. § 100.18(1), the 
                                                                                                                                                             
46 See, e.g., Tourek et al., supra note 16 (economic loss 
rule should not be applied to bar common law fraud claims); 
Frank Nussbaum, The Economic Loss Rule and Intentional Torts: A 
Shield or A Sword, 8 St. Thomas L. Rev. 473, 504-05 (1996) 
(same). 
47 As Judge Posner has written, the economic loss doctrine 
does not imply abolition of the fraud tort in all cases in which 
the plaintiff and the defendant have business relations.  Indeed 
for Judge Posner the application of economic loss to such cases 
poses a close question.  All-Tech Telecom, Inc. v. Amway Corp., 
174 F.3d 862, 867 (7th Cir. 1999).  The Seventh Circuit Court of 
Appeals declined to predict how this court would answer this 
question given that it is such a close call. 
No.  02-1034.ssa 
 
16 
 
Deceptive Trade Practices Act (DTPA), on the following theories:  
(A) The plaintiffs' case is premised primarily on the allegation 
that Harley-Davidson failed to disclose the alleged motorcycle 
defect48 and the DTPA prohibits only untrue, deceptive, or 
misleading affirmative assertions rather than omissions; and (B) 
any affirmative assertions are puffery and not actionable.49   
¶76 I discuss each of these issues in turn. 
A 
¶77 The allegation that Harley-Davidson failed to disclose 
certain 
defects 
is 
only 
one 
aspect 
of 
the 
plaintiffs' 
allegations, and "the nondisclosure" cannot be viewed in 
isolation.  The advertising material has to be read as a whole 
to determine whether any assertion, representation, or statement 
of fact is untrue, deceptive, or misleading under the statute.50 
¶78 The 
plaintiffs' 
cause 
of 
action 
under 
Wis. Stat. § 100.18(1) also alleges that Harley-Davidson made 
deceptive affirmative statements that motorcycles equipped with 
TC-88 engines were of a particular standard or quality.  The 
plaintiffs also allege that Harley-Davidson knew or should 
reasonably have known that the motorcycles with TC-88 engines 
                                                 
48 Majority op., ¶40. 
49 Id., ¶41. 
50 Avis Rent A Car Sys., Inc. v. Hertz Corp., 782 F.2d 381, 
385 (2d Cir. 1986) ("Thus, we have emphasized that in reviewing 
FTC actions prohibiting unfair advertising practices under the 
Federal Trade Commission Act a court must 'consider the 
advertisement 
in 
its 
entirety 
and 
not . . . engage 
in 
disputatious dissection. The entire mosaic should be viewed 
rather than each tile separately.'") (quoting FTC v. Sterling 
Drug, Inc., 317 F.2d 669, 674 (2d Cir. 1963). 
No.  02-1034.ssa 
 
17 
 
"were dangerously defective" and failed to advise or warn 
purchasers of an inherent, disabling defect rendering the 
motorcycles unsafe and unsuitable for their intended and 
foreseeable use, including long-distance and highway riding. 
¶79 Whether, at the motion to dismiss stage, the failure 
to disclose falls within the DTPA is a question of statutory 
interpretation, a question of law that this court decides 
independently of the circuit court or court of appeals, but 
benefiting from their analyses.  In construing a statute, our 
goal is to discern and give effect to the intent of the 
legislature.51  In so doing, a court must ascertain the 
legislative intent from the language of the statute in relation 
to its context, history, scope, and objective, including the 
consequences of alternative interpretations.52 
¶80 Wisconsin Stat. § 100.18(1) 
protects 
consumers 
from 
untrue, deceptive, or misleading advertisements, announcements, 
statements or representations.  The statute proscribes an 
"advertisement, 
announcement, 
statement 
or 
representation 
contain[ing] any assertion, representation or statement of fact 
which is untrue, deceptive or misleading." 53  
                                                 
51 State v. Cole, 2003 WI 59, ¶13, 262 Wis. 2d 167, 663 
N.W.2d 700 (citing State v. Szulczewski, 216 Wis. 2d 495, 504, 
574 N.W.2d 660 (1998)). 
52 See Cole, 262 Wis. 2d 167, ¶13 (citing State v. Davis, 
2001 WI 136, ¶13, 248 Wis. 2d 986, 637 N.W.2d 62). 
53 In full, Wis. Stat. § 100.18(1) provides that: 
No person, firm, corporation or association, or agent 
or employee thereof, with intent to sell, distribute, 
increase the consumption of or in any wise dispose of 
any real estate, merchandise, securities, employment, 
No.  02-1034.ssa 
 
18 
 
¶81 The language of the statute is broad in scope, 
affecting numerous entities, products, services, and means of 
communication.  Wisconsin courts have consistently held that the 
language of Wis. Stat. § 100.18 serves a remedial purpose, going 
                                                                                                                                                             
service, or anything offered by such person, firm, 
corporation or association, or agent or employee 
thereof, directly or indirectly, to the public for 
sale, hire, use or other distribution, or with intent 
to induce the public in any manner to enter into any 
contract or obligation relating to the purchase, sale, 
hire, use or lease of any real estate, merchandise, 
securities, 
employment 
or 
service, 
shall 
make, 
publish, disseminate, circulate, or place before the 
public, or cause, directly or indirectly, to be made, 
published, disseminated, circulated, or placed before 
the public, in this state, in a newspaper, magazine or 
other publication, or in the form of a book, notice, 
handbill, poster, bill, circular, pamphlet, letter, 
sign, placard, card, label, or over any radio or 
television station, or in any other way similar or 
dissimilar 
to 
the 
foregoing, 
an 
advertisement, 
announcement, statement or representation of any kind 
to the public relating to such purchase, sale, hire, 
use or lease of such real estate, merchandise, 
securities, service or employment or to the terms or 
conditions thereof, which advertisement, announcement, 
statement or representation contains any assertion, 
representation or statement of fact which is untrue, 
deceptive or misleading. 
No.  02-1034.ssa 
 
19 
 
further than the common law in providing a cause of action to 
consumers who have been deceived or mislead.54   
¶82 The history of the statute supports the view that its 
broad language serves the purpose of consumer protection. In 
reviewing 
the 
evolution 
of 
the 
statute, 
this 
court 
has 
previously concluded that since its  enactment, the legislature 
has 
expanded 
the 
reach 
of 
Wis. Stat. § 100.18 
to 
afford 
consumers new protections to keep pace with increasingly 
sophisticated methods of disseminating information.55 
                                                 
54 See Tim Torres Enters., Inc. v. Linscott, 142 Wis. 2d 56, 
72, 416 N.W.2d 670 (Ct. App. 1987) ("The broad remedial scope of 
sec. 100.18 and its protective purpose make it similar to the 
remedial provisions of the federal antitrust laws in that to 
eliminate or rectify a wrong the traditional standards of proof 
may be relaxed if necessary."); Dorr v. Sacred Heart Hosp., 228 
Wis. 2d 425, 445, 597 N.W.2d 462 (Ct. App. 1999) ("Section 
100.18 prohibits deceptive, misleading, or untrue statements of 
any kind to the public made in a commercial setting, no matter 
how made."); Kailin, 252 Wis. 2d 676, ¶42 ("[W]e reject the 
premise . . . that Wis. Stat. § 100.18 does not create a new 
cause of action, but simply provides a remedy for common law 
claims . . . ."). 
The elements of the cause of action under § 100.18 differ 
from 
those 
of 
the 
common 
law 
claims 
of 
intentional 
misrepresentation, 
strict 
liability 
misrepresentation 
and 
negligent misrepresentation.  Kailin, 252 Wis. 2d 676, ¶40. 
55 State v. Automatic Merchandisers of Am., Inc., 64 
Wis. 2d 659, 662-63, 221 N.W.2d 683 (1974).  See also Bonn v. 
Haubrich, 123 Wis. 2d 168, 173-74, 366 N.W.2d 503 (Ct. App. 
1985). 
No.  02-1034.ssa 
 
20 
 
¶83 The 
majority 
opinion 
simply 
concludes, 
without 
reasoning or authority, that a nondisclosure is not "an 
assertion, 
representation 
or 
statement 
of 
fact" 
under 
Wis. Stat. § 100.18(1).56  Neither the language of the statute 
                                                                                                                                                             
One commentator has written that "Wisconsin's statutory 
misrepresentation 
law . . . was 
enacted 
to 
address 
the 
shortcomings of common law protections for consumers. . . . The 
evils the legislature was attempting to remedy [in § 100.18] 
were not just overt deception but also implicit deception such 
as advertising that has the tendency to mislead consumers, 
intentionally or not."  Cullen Goretzke, The Resurgence of 
Caveat Emptor: Puffery Undermines the Pro-Consumer Trend in 
Wisconsin's Misrepresentation Doctrine, 2003 Wis. L. Rev. 171, 
222. 
56 Majority 
op., 
¶40. 
 
The 
case 
law 
interpreting 
Wis. Stat. § 100.18 does not, as the majority opinion claims at 
note 
4, 
point 
toward 
the 
inexorable 
conclusion 
that 
nondisclosures are not actionable under the statute.  Although 
the cases reported involved affirmative assertions, the lack of 
litigation on this subject is not dispositive.  In fact, Grube 
v. Daun, 173 Wis. 2d 30, 496 N.W.2d 106 (Ct. App. 1987), a case 
cited by the majority opinion as allowing only a claim under 
§ 100.18 based on affirmative misrepresentations, does not stand 
for this proposition. 
In Grube, the plaintiffs brought actions for "negligence, 
intentional 
misrepresentation, 
strict 
responsibility 
for 
misrepresentation, negligent misrepresentation and violation of 
sec. 
100.18" 
against 
the 
defendants 
for 
making 
certain 
affirmative assertions regarding the suitability of the property 
for business and family purposes and for failing to disclose the 
existence of an underground gasoline tank that was later 
discovered to be causing groundwater contamination.   
The court of appeals in Grube addressed the difference 
between an affirmative assertion and a nondisclosure in the 
context of the common law misrepresentation claims and not with 
respect to Wis. Stat. § 100.18.  With respect to the common law 
fraud claims, the court of appeals concluded that "the Grubes' 
complaint 
alleges 
facts 
to 
support 
claims 
of 
misrepresentation . . . both 
affirmatively 
and 
through 
nondisclosure."  Grube, 173 Wis. 2d at 56.   
No.  02-1034.ssa 
 
21 
 
nor 
the 
case 
law 
excludes 
misrepresentations 
through 
nondisclosures made in the course of a consumer transaction in 
which representations have been made. 
¶84 In the present case, Harley-Davidson made various 
claims about the quality of its product, clearly implying that 
its engine would not be subject to sudden and complete 
mechanical failure.  The plaintiffs' complaint alleges that 
Harley-Davidson 
"advertised 
and 
marketed 
the 
motorcycles 
equipped with TC-88 engines as premium quality motorcycles that 
were safe and appropriate for their intended and foreseeable 
use, 
including 
long-distance 
and 
highway 
riding." 
 
The 
plaintiffs further allege that the motorcycles are not, in fact, 
safe and appropriate for such uses because the defect in the cam 
bearing may leave riders stranded or cause them to be injured.   
¶85 The Wisconsin Civil Jury Instructions explain that an 
assertion is "untrue if it is false, erroneous, or does not 
state or represent things as they are."57  An assertion is 
"deceptive or misleading if it causes a reader or listener to 
believe something other than what is in fact true or leads to a 
                                                                                                                                                             
The plaintiffs in Grube premised their Wis. Stat. § 100.18 
claim in significant part on defendant Thiel's silence in 
response to the plaintiff's questions.  Plaintiff Grube's Brief 
at 19; Respondent Thiel's Brief and Appendix at 4-5.  The court 
of appeals allowed the § 100.18 claim to proceed, stating that 
"the misrepresentations . . . alleged in the Grubes' complaint, 
if proven, are 'deceptive advertising'" within the scope of sec. 
100.18."  Grube, 173 Wis. 2d at 57.  The court of appeals 
apparently used "misrepresentation" in its opinion to refer to 
both affirmative and nondisclosure misrepresentation. 
57 Wis. JI——Civil 2418 (2002). 
No.  02-1034.ssa 
 
22 
 
wrong belief."58  The law is clear that an advertisement is 
deceptive or misleading not only by false affirmative assertions 
but by assertions, representations, and statements of fact that 
fail to disclose the whole truth or that omit important facts 
and thus, give misleading impressions.59   
¶86 If a seller speaks, its words must be sufficient so as 
not to be misleading.  "[H]alf of the truth may obviously amount 
to a lie, if it is understood to be the whole."60  In other 
words, the allegation is that Harley-Davidson affirmatively 
asserted that the engine was a "masterpiece," implying that it 
had no inherent defect subjecting it to failure.    
¶87 The Federal Trade Commission, upon which this court 
has relied in the past,61 has recognized that while an 
advertisement may make assertions that are literally true, it 
"may be deceptive where the overall impression communicated is 
misleading."62  
                                                 
58 Id. 
59 Perona v. Volkswagen of Am., Inc., 684 N.E.2d 859, 866 
(Ill. Ct. App. 1997) (failure to disclose sudden acceleration 
problem in vehicle sufficient to support fraud under consumer 
protection act). 
60 Dan B. Dobbs, Prosser and Keeton on the Law of Torts 
§ 106 at 738. (5th ed. 1984). 
61 See State v. Am. T.V. & Appliance of Madison, Inc., 146 
Wis. 2d 292, 301-02, 430 N.W.2d 709 (1988). 
62 See Ivan L. Preston, The Federal Trade Commission's 
Identification 
of 
Implications 
as 
Constituting 
Deceptive 
Advertising, 57 U. Cinn. L. Rev. 1243, 1247 (1989). 
No.  02-1034.ssa 
 
23 
 
¶88 Even in the context of common-law misrepresentation 
claims, this court recognized over twenty years ago that the 
distinction between an affirmative assertion and a nondisclosure 
has been consistently undermined by sensible public policy 
exceptions.  As the court stated in Ollerman v. O'Rourke Co., 
Inc., 94 Wis. 2d 17, 288 N.W.2d 95 (1980), courts have moved in 
their common-law interpretation of duty from "no duty to 
disclose" to holding sellers who actively conceal a defect or 
tell half-truths liable for misrepresentation.63  
¶89 The 
actionable 
words 
of 
Wis. Stat. § 100.18, 
"assertion, representation or statement of fact," should be read 
in the context of the statute as a whole and consistently with 
the legislature's goal of inhibiting a broad range of deceptive 
or misleading business communications.  Material omissions 
should not be excluded from the statute's reach when omissions 
make the assertions or representations about the merits of a 
product deceptive, misleading, or untrue.  The majority opinion 
limits the statute far beyond its words or the legislature's 
intent.     
¶90 The legislature adopted Wis. Stat. § 100.18 as the 
public policy of this state.  The legislature did not create an 
artificial 
distinction 
between 
a 
deceptive 
or 
misleading 
assertion, 
representation, 
or 
statement 
of 
fact 
and 
an 
assertion, 
representation, 
or 
statement 
of 
fact 
that 
is 
                                                 
63 Ollerman v. O'Rourke Co., Inc., 94 Wis. 2d 17, 30-31, 288 
N.W.2d 95 (1980) 
No.  02-1034.ssa 
 
24 
 
deceptive or misleading because it is a partial truth.  This 
court should not do so in the legislature's stead. 
B 
¶91 The majority opinion dismisses the allegations of 
deceptive advertising, labeling them as puffery.  
¶92 We look first at the allegations of the complaint, 
which are to be liberally construed with all reasonable 
inferences drawn in favor of the plaintiffs.64  The complaint 
asserts that Harley-Davidson deceptively advertised the TC-88 
engines and motorcycles as being equipped with safe, premium 
quality engines that were reliable and appropriate for long-
distance and highway use.  More specifically, the complaint 
includes affirmative assertions made by Harley-Davidson with 
respect to the performance of the affected motorcycles and the 
research, development, and testing of those motorcycle engines 
that induced the plaintiffs to purchase their motorcycles.  
¶93 The plaintiffs in the present case allege that Harley-
Davidson made three representations that misled them and induced 
them 
to 
purchase 
defective 
motorcycles. 
 
Those 
alleged 
representations are as follows:  
                                                 
64 Scarpaci v. Milwaukee County, 96 Wis.2d 663, 669, 292 
N.W.2d 816 (1980) ("The purpose of the complaint is to give 
notice of the nature of the claim; and therefore, it is not 
necessary for the plaintiff to set out in the complaint all the 
facts which must eventually be proved to recover.  The purpose 
of a motion to dismiss for failure to state a claim is the same 
as the purpose of the old demurrer to test the legal sufficiency 
of the claim.  Because the pleadings are to be liberally 
construed, a claim should be dismissed as legally insufficient 
only if 'it is quite clear that under no conditions can the 
plaintiff recover.'") (citations omitted). 
No.  02-1034.ssa 
 
25 
 
(1) Harley-Davidson's marketing literature described 
the development of the TC-88 engine in the following 
manner: 
Developing [the TC-88s] was a six-year process . . . . 
The result is a masterpiece.  We studied everything 
from the way oil moves through the inside, to the way 
a rocker cover does its job of staying oil-tight.  
Only 21 functional parts carry over in the new design.  
What does carry over is the power of a Harley-
Davidson® engine, only more so. 
(2) Harley-Davidson described the TC-88 engine as 
"[e]ighty-eight cubic inches filled to the brim with torque 
and ready to take you thundering down the road"; and  
(3) 
Harley-Davidson 
"advertised 
and 
marketed 
the 
motorcycles equipped with TC-88 engines as premium quality 
motorcycles that were safe and appropriate for their 
intended and foreseeable use, including long-distance and 
highway riding." 
¶94 The 
majority 
opinion 
dismisses 
the 
plaintiffs' 
complaint because it contends that words and phrases like 
"masterpiece," "premium quality," and "filled to the brim with 
torque and ready to take you thundering down the road" are too 
vague and indefinite to be verified.65     
¶95 The majority opinion takes the words "masterpiece" and 
"premium quality" out of the context of the marketing and 
advertising literature, which made a number of representations, 
the truth of which are capable of being verified.  Specifically, 
the length of testing ("six-year process"), the extent of 
                                                 
65 Majority op., ¶44. 
No.  02-1034.ssa 
 
26 
 
testing ("studied everything"), the number of carryover parts 
("21"), and the power equivalence with prior models are all 
facts that can be verified.  That Harley-Davidson referred to 
all of these achievements as culminating in a "masterpiece" of 
"premium quality" suggests that all of the research and testing 
produced an extremely high quality product and clearly implies 
that this is not an engine that would be subject to sudden and 
complete mechanical failure. 
¶96 The 
majority 
opinion, 
with 
little 
analysis 
or 
authority, dismisses all of these statements as puffery.  I 
conclude that Harley-Davidson's statements, read as a whole, 
were not puffery and are sufficient to support a claim under 
Wis. Stat. § 100.18. 
¶97 "Puffery" refers broadly to nonfactual representations 
such as statements of opinion or value.66  The court has defined 
"puffing . . . [as] a term frequently used to denote the 
exaggerations reasonably to be expected of a seller as to the 
degree of quality of his product, the truth or falsity of which 
cannot be precisely determined."67   
¶98 Puffery has "long [been] considered an acceptable 
advertising technique,"68 and cases hold that a consumer cannot 
                                                 
66 Goretzke, supra note 55, at 171. 
67 Am. T.V. & Appliance, 146 Wis. 2d at 301-02. 
68 Id. at 301. 
No.  02-1034.ssa 
 
27 
 
rest a claim for misrepresentation on puffery because no 
reasonable person would rely on such representations.69 
¶99 The distinction between a statement of fact, a 
statement of opinion, and puffery is often faint, uncertain, and 
not easily drawn.70  Puffery is a form of a statement of opinion 
and opinions and facts drift into each other.  Thus the 
distinction among the three has been hard to apply and has 
produced inconsistent case law.71  The distinction has also been 
                                                 
69 Contemporary research suggests that the legal conclusion 
that a reasonable person does not rely on seller's statements of 
opinion or quality does not reflect reality.   Studies suggest 
that consumers do not necessarily distinguish between statements 
of fact and statements describing quality.  Goretzke, supra note 
55, at 173-74 (discussing the fact that subjects treated the 
statement that a car gets "27 miles per gallon on regular gas" 
and the opinion that a car gets "truly excellent gas mileage" as 
equivalents). 
70 Miranovitz v. Gee, 163 Wis. 246, 255, 157 N.W. 790 (1916) 
("The attempt to base a distinction upon the difference between 
an 'opinion' and a 'fact' has resulted in much confusion; 
representations in one case being held to be matters of opinion 
and representations in another case of exactly the same 
character being held to be statements of fact.  This distinction 
is oftentimes uncertain, indefinite, and unreal.").   
Judge Learned Hand concluded that a supposed distinction 
between opinion and fact has not "escaped the criticism it 
deserves."  Whether it is opinion or fact depends in part on the 
circumstances of the buyer and seller.  Vulcan Metals Co. v. 
Simmons Mfg. Co., 248 F. 853, 856 (2d Cir. 1918). 
71 For instance, in Consolidated Papers, Inc. v. Dorr-
Oliver, Inc., 153 Wis. 2d  589, 594, 451 N.W.2d 456 (Ct. App. 
1989), the court of appeals held that a seller's claim that a 
liquid clarifier would have a "long equipment life" was puffery, 
but in Radford v. J.J.B. Enterprises, 163 Wis. 2d  534, 544-45, 
472 N.W.2d 790 (Ct. App. 1991), the court of appeals held that 
representing a boat as having a "sound hull" was not. 
No.  02-1034.ssa 
 
28 
 
viewed as a question for the trier of fact, not one of law for 
the court, thus providing another reason for not dismissing the 
complaint on a motion to dismiss.72 
¶100 A seller can be held liable not only for statements of 
fact but also statements of opinion.73  I would therefore 
conclude that Harley-Davidson's statements of opinion regarding 
the quality of its product are not puffery, or at least present 
a jury question, and are actionable.  This approach is 
consistent with a long line of Wisconsin case law.74 
¶101 Harley-Davidson's advertising literature, coupled with 
Harley-Davidson's status as one of the premier motorcycle 
                                                                                                                                                             
In Loula v. Snap-On Tools Corp., 175 Wis. 2d 50, 54, 498 
N.W.2d 866 (Ct. App. 1993), claims that "a Snap-On dealership 
was a no-risk proposition" and that such dealers "make as much 
money as doctors and lawyers" were held to be puffery. 
These decisions provide no sense of a clear boundary 
between what statements do or do not constitute puffery. 
72 See, e.g., Miranovitz, 163 Wis. at 253; Lambert v. Hein, 
218 Wis. 2d 712, 724, n.4, 582 N.W.2d 84 (Ct. App. 1998). 
73 Wisconsin has assigned liability for statements of 
opinion that are made by a person who does not believe the 
statements to be true.  See, e.g., Lundin v. Shimanski, 124 
Wis. 2d 175, 192, 
368 N.W.2d 676 
(1985) ("[S]tatements of 
opinion 
are 
actionable 
if 
the 
speaker 
knows 
of 
facts 
incompatible 
with 
his 
opinion."); 
Hartwig 
v. 
Bitter, 
29 
Wis. 2d 653, 
658, 
139 
N.W.2d 644 
(1966) 
("It 
is 
clear, 
therefore, that if, at the time of the assertion, the utterer is 
aware of facts that are incompatible with his opinion . . . the 
fraud is in praesenti."); Zingale v. Mills Novelty Co., 244 
Wis. 144, 150, 11 N.W.2d 644 (1943) ("A statement of opinion in 
a business transaction upon facts not disclosed or otherwise 
known to the recipient may reasonably be interpreted as an 
implied statement that the maker knows of no fact incompatible 
with his opinion.").  
74 See cases cited at note 73, supra. 
No.  02-1034.ssa 
 
29 
 
manufacturers in the world, confirms that its statements were  
not mere puffery.  Harley-Davidson has built its reputation on 
producing high quality products for many years.  This reputation 
would lead a reasonable person to believe that when Harley-
Davidson claims it has built a "masterpiece," it has in fact 
built a motorcycle that does not have a material defect.    
¶102 The majority opinion's dismissal of the statements as 
boastful posturing does a disservice to both Harley-Davidson and 
the consuming public that holds Harley-Davidson's products in 
such high esteem. 
¶103 While the allegations in the complaint may or may not 
be borne out at trial, I conclude that if the majority opinion 
were treating all facts pleaded and all reasonable inferences 
drawn from those facts as true for the purpose of testing the 
legal sufficiency of the complaint, it would conclude that the 
plaintiffs have made assertions sufficient to support a cause of 
action under Wis. Stat. § 100.18. 
¶104 For the reasons set forth, I dissent. 
 
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