Opinion ID: 1519009
Heading Depth: 1
Heading Rank: 2

Heading: liability under minnesota law

Text: We consider next the extent to which the Nishika Plaintiffs may recover damages under Minnesota's version of Uniform Commercial Code section 2-318. That statute provides: A seller's warranty whether express or implied extends to any person who may reasonably be expected to use, consume or be affected by the goods and who is injured by breach of the warranty. A seller may not exclude or limit the operation of this section. MINN.STAT.ANN. § 336.2-318 (Supp.1997). Both here and in the court of appeals, 3M has argued that section 336.2-318 prohibits two of the Nishika Plaintiffs, Nishika Manufacturing and American 3D, from recovering lost profits as a matter of law. Considering evidence that 3M knew about the Nishika Plaintiffs' multilevel marketing system and that these interdependent businesses each relied upon 3M's film-development process, the court of appeals disagreed. 885 S.W.2d at 625-26. In the court of appeals' view, section 336.2-318 allows any foreseeable plaintiff who is injured by the defendant-seller's breach of warranty to recover damages resulting from that breach, economic or otherwise. See id. As our Court noted before, some authority supports this interpretation, but no Minnesota case has applied section 336.2-318 so broadly. 955 S.W.2d at 856-57. To avoid erroneously interpreting Minnesota law, we called upon the Minnesota Supreme Court to resolve this issue. Answering our first certified question, Minnesota's high court rejected the court of appeals' reading of section 336.2-318, stating: [T]hose who purchase, use, or otherwise acquire warranted goods have standing to sue for purely economic losses. Those who lack any such connection to the warranted goods must demonstrate physical injury or property damage before economic losses are recoverable. Minnesota Mining, 565 N.W.2d at 21. We now apply this rule here. Nishika Manufacturing and American 3D never dealt directly with 3M, and neither company ever used or otherwise acquired 3M's goods. Moreover, the Nishika Plaintiffs sought only economic losseslost profitsunder their single-economic-unit theory. Thus, to recover, those plaintiffs lacking a direct connection to the warranted goods had to prove physical injury or property damage resulting from 3M's actions. There is no evidence that 3M caused Nishika Manufacturing or American 3D to suffer either physical injury or property damage. [N]oncontracting parties who never used, purchased, or otherwise acquired the seller's warranted goods may not seek lost profits, unaccompanied by physical injury or property damage, for breach of warranty under the statute. Minnesota Mining, 565 N.W.2d at 22. Accordingly, we hold that Nishika Manufacturing and American 3D cannot recover from 3M as a matter of law.