doTERRA v. Kruger , 2021 UT 24 ( 2021 )

2021 UT 24IN THE
SUPREME COURT OF THE STATE OF UTAH
dōTERRA INTERNATIONAL, LLC,
Petitioner,
v.
JESSICA KRUGER,
Respondent.
No. 20191040
Heard March 10, 2021
Filed July 1, 2021
On Interlocutory Appeal
Fourth District, Utah County
The Honorable Thomas Low
No. 160401667
Attorneys 1:
Steven C. Smith, Irvine, CA, Aaron R. Harris, Lehi,
Daniel S. Wittenberg, Katherine R. Nichols, Salt Lake City,
for petitioners
Blake W. Johnson, Orem, for respondent
JUSTICE PEARCE authored the opinion of the Court in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE HIMONAS and JUSTICE PETERSEN joined.
JUSTICE HIMONAS authored a concurring opinion, in which
JUSTICE PETERSEN joined.
JUSTICE PEARCE, opinion of the Court:
1 Amicus curiae briefs were submitted by John A. Anderson,
Lauren E.H. DiFrancesco, Salt Lake City, on behalf of the
International Association of Defense Counsel, and Alyson C.
McAllister, Paul M. Simmons, Salt Lake City, on behalf of the Utah
Association for Justice.
dōTERRA v. KRUGER
Opinion of the Court
INTRODUCTION
¶1 Jessica Kruger, a dōTERRA International, LLC (dōTERRA)
distributor or Wellness Advocate, purchased a dōTERRA product
and applied it to her skin before visiting a tanning salon. Shortly
thereafter, Kruger was diagnosed with second and third-degree
chemical burns.
¶2 Kruger brought legal action against dōTERRA, seeking,
among other things, punitive damages based on dōTERRA’s failure
to warn about the potential dangers of its product. dōTERRA moved
for partial summary judgment arguing that Kruger waived the right
to seek punitive damages in the paperwork she signed to become a
dōTERRA distributor. The district court denied that motion and
ruled that Utah law does not allow preinjury waivers of punitive
damages. In the course of reaching that decision, the district court
referred to dōTERRA’s agreement with Kruger as a contract of
adhesion.
¶3 dōTERRA sought an interlocutory appeal. We affirm the
district court’s denial of the partial motion for summary judgment,
but we employ a different rationale than the district court did. To the
extent that the district court’s reference to dōTERRA’s contract as
one of adhesion constitutes a ruling on that issue, we vacate it.
BACKGROUND
¶4 Kruger wanted to become a dōTERRA Wellness Advocate,
which is the term that dōTERRA uses for its independent
distributors. 2 dōTERRA required her to sign a Wellness Advocate
Agreement (Agreement). Once a Wellness Advocate, Kruger
purchased ClaryCalm, a dōTERRA product intended to address
“normal symptoms associated with PMS and the transition through
menopause.” The labeling did not mention that the product
contained a high concentration of an ingredient that causes
sensitivity to the sun. In fact, the label said: “Does not cause sun
sensitivity.”
2 This case comes before us as an interlocutory appeal of the
district court’s decision to deny dōTERRA’s motion for partial
summary judgment. In this procedural posture, we consider the
alleged facts in the light most favorable to the non-moving party,
Kruger. Massey v. Griffiths, 2007 UT 10, ¶ 8, 152 P.3d 312.
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¶5 Kruger went tanning several hours after she had applied
ClaryCalm to her abdomen and back. That evening, she noticed a
sunburn where she had used ClaryCalm. The sunburn worsened the
next day, and it became even more severe the day after that. Kruger
sought treatment at an urgent care facility. The urgent care provider,
observing the burn’s severity, sent her to the hospital. The hospital
diagnosed her with second and third-degree chemical burns.
¶6 Subsequent testing revealed that ClaryCalm contained a
compound called bergapten. Bergapten can cause increased
sensitivity to the sun at 15 ppm. ClaryCalm contained the ingredient
at a concentration of 347 ppm.
¶7 dōTERRA warned consumers when its other products
caused sun sensitivity, but, by its own admission, erroneously left
this warning off of the ClaryCalm label. Prior to Kruger’s injury,
other customers had complained to dōTERRA about burns after
using ClaryCalm. Some of those customers requested that dōTERRA
place a warning on ClaryCalm about the risk of burns. dōTERRA
eventually reformulated the product to remove the phototoxic
compound that Kruger claims caused her burns.
¶8 Kruger filed a complaint against dōTERRA seeking recovery
for her injuries. She also sought punitive damages “to deter future
similar conduct.” dōTERRA moved for partial summary judgment.
¶9 dōTERRA argued that Kruger was contractually restricted
from seeking punitive damages because, as a dōTERRA Wellness
Advocate, she had waived her ability to claim punitive damages.
dōTERRA based its motion on the Agreement. That document states
that
dōTERRA . . . shall not be liable for special, indirect,
incidental, consequential, punitive, or exemplary
damages. If dōTERRA is found to be in breach of the
[Agreement], the maximum amount of damages I may
claim shall be limited to the amount of unsold
inventory that I personally purchased from the
company and have remaining on hand. I release and
agree to indemnify dōTERRA and its affiliates from
any and all liability, damages, fines, penalties, or other
awards or settlements arising from, or relating to my
actions in the promotion or operation of my dōTERRA
independent business and any activities related to it
....
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dōTERRA v. KRUGER
Opinion of the Court
¶10 The Agreement incorporated the dōTERRA Policy Manual
by reference. The Policy Manual provides that dōTERRA
shall not be liable for any: . . . special, indirect,
incidental, punitive, or consequential damages,
including loss of profits, arising from or related to the
operation or use of the products including, without
limitation, damages arising from loss of revenue or
profits, failure to realize savings or other benefits,
damage to equipment, and claims against the [Wellness
Advocate] by any third person . . . .
dōTERRA argued in its motion for partial summary judgment that
the two provisions demonstrated that Kruger had waived any right
she may have had to claim punitive damages from her injuries.
¶11 The district court denied dōTERRA’s motion. The district
court acknowledged that the Agreement and Policy Manual
expressly reference a waiver of punitive damages. But the district
court concluded that Utah law prohibits a party from enforcing a
preinjury waiver of liability for its own egregious conduct. 3
¶12 Specifically, the district court found that Russ v. Woodside
Homes, Inc., 905 P.2d 901 (Utah Ct. App. 1995), stands in the way of
preinjury waivers of punitive damages. The Russ court reasoned
that, “Generally, parties ‘not engaged in public service may properly
bargain against liability for harm caused by their ordinary
negligence in performance of contractual duty; but such an
exemption is always invalid if it applies to harm wil[l]fully inflicted
or caused by gross or wanton negligence.’” Id. at 904 (citation
omitted).
¶13 dōTERRA interpreted Russ differently. dōTERRA agreed
that Russ precludes a party from enforcing a preinjury waiver of
liability. But dōTERRA argued that its contract contained a preinjury
waiver of a remedy; a provision it contended the Russ court did not
explicitly address.
¶14 The district court rejected this distinction, finding, “Punitive
damages are a form of liability.” The district court noted that, in
3Kruger also argued that she had not waived her right to seek
punitive damages because dōTERRA’s waiver was not “clear and
unequivocal,” as Utah law requires. The district court did not
address that argument.
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Russ, the court of appeals held that bargaining to avoid liability for
“harm wil[l]fully inflicted or caused by gross or wanton negligence”
is “always invalid.” Id. (citation omitted). The district court reasoned
that a plaintiff must establish “willful and malicious . . . conduct, or
conduct that manifests a knowing and reckless indifference toward,
and a disregard of, the rights of others” to receive punitive damages
under Utah Code section 78B-8-201(1)(a). The court further reasoned
that since the standard for proving punitive damages is set quite
high—“willful and malicious conduct”—it would be “a remarkable
thing” for punitive damages to fall below the bar Russ set for
conduct that cannot be waived: “harm wil[l]fully inflicted or caused
by gross or wanton negligence.” Russ, 905 P.2d at 904. And the
district court concluded that Utah law did not permit Kruger to
waive her right to sue dōTERRA for punitive damages.
¶15 At one point in its order, the district court stated that
“[dōTERRA]’s policy manual is a contract of adhesion.” The district
court characterized the Agreement this way in the course of
distinguishing a case dōTERRA cited suggesting that “punitive
damages can be appropriately bargained away.”
¶16 dōTERRA sought interlocutory review of the district court’s
order denying dōTERRA’s motion for partial summary judgment.
dōTERRA challenges the district court’s conclusion that Utah law
precludes preinjury waivers of punitive damages and its finding that
dōTERRA’s Agreement was a contract of adhesion.
STANDARD OF REVIEW
¶17 “We review a [district court’s] summary judgment
determination ‘for correctness, granting no deference to the [district]
court’s legal conclusions.’” Wayment v. Clear Channel Broad., Inc., 2005
UT 25, ¶ 15, 116 P.3d 271 (second alteration in original) (citation
omitted).
ANALYSIS
I. KRUGER’S WAIVER OF PUNITIVE DAMAGES
WAS NOT CLEAR AND UNEQUIVOCAL
¶18 dōTERRA asks us to address whether Utah law permits a
party to waive punitive damages and to conclude that it does. In
dōTERRA’s view, Utah law should respect freedom of contract and
allow a party to preemptively bargain away her right to seek
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dōTERRA v. KRUGER
Opinion of the Court
punitive damages. 4 However, this court can affirm where there
exists another ground to sustain the decision that is apparent from
the record. See Bailey v. Bayles, 2002 UT 58, ¶ 13, 52 P.3d 1158. And
here, there is another ground apparent on the record that this court
is better positioned to address.
¶19 Kruger argued to the district court that even if Utah law
permitted a preinjury waiver of punitive damages, that waiver
would have to be “clear and unequivocal.” Kruger contended that
the Agreement she signed with dōTERRA lacked such clarity. The
district court did not reach this argument because it ruled that Utah
law did not allow a person to waive punitive damages. Kruger
renews this argument on appeal, and we affirm on this basis.
¶20 We have not addressed whether a party can waive a claim
for punitive damages prior to injury. Nor have we opined on what,
assuming a party can enter into such an agreement, that waiver must
look like. But this court has held that, for one party to “indemnify
[another] . . . against the latter’s negligent acts,” the parties must
“make that intent clear and unmistakable.” Union Pac. R.R. Co. v. El
Paso Nat. Gas Co., 408 P.2d 910, 914 (Utah 1965). In Union Pacific
Railroad Co., the parties presented us with a contract that provided
that El Paso Natural Gas would indemnify Union Pacific
from and against any and all liability, loss, damage,
claims, . . . of whatsoever nature . . . growing out of injury
or harm to or death of persons whomsoever, or loss or
destruction of or damage to property whatsoever,
including the pipe line, when such injury, harm, death,
loss, destruction or damage, howsoever caused, grows
out of or arises from the bursting of or leaks in the pipe
line, or in any other way whatsoever is due to or arises
because of the existence of the pipe line or the construction,
operation, maintenance, repair, renewal, reconstruction
4 To demonstrate that a freely negotiated agreement violates
public policy, a party must be able to articulate a “‘well-defined and
dominant’ policy” sufficient to create a showing “free from doubt.”
Eagle Mountain City v. Parsons Kinghorn & Harris, P.C., 2017 UT 31,
¶ 15, 408 P.3d 322 (citations omitted). Without comment on the
parties’ arguments that existing statutory references to punitive
damages either are or are not a clear enough expression of policy to
sustain the burden Eagle Mountain describes, we invite the legislature
to consider specifically addressing the question.
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or use of the pipe line or any part thereof, or to the
contents therein or therefrom.
Id. at 912 (alterations in original). Union Pacific argued that this
required El Paso Gas to indemnify for losses arising out of Union
Pacific’s negligence. Id. We noted that “the law does not look with
favor upon one exacting a covenant to relieve himself of the basic
duty which the law imposes on everyone: that of using due care for
the safety of himself and others.” Id. at 913. This led us to conclude
that “the presumption is against any such intention, and it is not
achieved by inference or implication from general language.” Id.
at 914. We reasoned that, if the parties had intended that El Paso Gas
indemnify Union Pacific for the railroad’s negligent acts, “it would
have been easy enough to use that very language and to thus make
that intent clear and unmistakable.” Id.
¶21 We applied this standard in Pearce v. Utah Athletic Found.,
2008 UT 13, ¶¶ 5 n.1, 22–23, 179 P.3d 760, abrogated on other grounds
by Penunuri v. Sundance Partners Ltd., 2017 UT 54, 423 P.3d 1150.
There, we held that a waiver was “clear and unequivocal” where it
disclaimed “ANY AND ALL LIABILITY, CLAIMS, DEMANDS,
AND CAUSES OF ACTION WHATSOEVER ARISING OUT OF OR
RELATED TO ANY LOSS, DAMAGE, OR INJURY, INCLUDING
DEATH.” Id. ¶¶ 23, 5 n.1. We noted that this waiver “conceivably
could have been written more concisely or plainly, but that does not
render it unclear or ambiguous.” Id. ¶ 23. Crucially, “[t]he sentence,
in clear and unequivocal language, releases [the defendant] from any
claim ‘whether caused by the negligence of [the defendant] or
otherwise.’” Id. Therefore, the waiver was enforceable.
¶22 We see no reason why a preinjury waiver of punitive
damages—assuming that Utah law permits such a creature—should
require anything less than the “clear and unequivocal” language
required for waivers of liability. Here, as in Union Pacific Railroad Co.,
we note that “the law does not look with favor upon one exacting a
covenant to relieve himself [or herself] of the basic duty which the
law imposes on everyone: that of using due care for the safety of
himself [or herself] and others.” See 408 P.2d at 913. Therefore, if
such a waiver is to be given effect, it is “easy enough to use that very
language and to thus make that intent clear and unmistakable.” Id.
at 914.
¶23 dōTERRA argues that Union Pacific Railroad Co. ought not
apply to this case. dōTERRA notes that it is not trying “to exempt
itself from all tort liability for the injuries its products allegedly
caused.” Rather, “dōTERRA is seeking to enforce a much narrower
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dōTERRA v. KRUGER
Opinion of the Court
waiver that only precludes Kruger from recovering one particular
type of damages—punitive damages.” dōTERRA notes that this
court has previously held that “punitive damages are not intended
as additional compensation to a plaintiff.” Behrens v. Raleigh Hills
Hosp., Inc., 675 P.2d 1179, 1186 (Utah 1983). Therefore, dōTERRA
argues, “this case is readily distinguishable from” cases involving
complete waivers of liability that preclude a plaintiff’s ability to
recover anything for her injuries. But in Union Pacific Railroad Co., we
did not speak narrowly of just “compensation to a plaintiff,” like we
did in Behrens. Compare Behrens, 675 P.2d at 1186, with Union Pac. R.R.
Co., 408 P.2d at 913. Instead, we spoke broadly in Union Pacific
Railroad Co. about waiver of the responsibility of “using due care for
the safety himself [or herself] and others.” 408 P.2d at 913.
¶24 So, even though—as dōTERRA correctly observes—our
cases have “addressed broader attempts by parties to totally exempt
themselves from tort liability, rather than waivers of a single, non-
compensatory form of damages,” we nevertheless find the logic of
Union Pacific Railroad Co. compelling in this context. Punitive
damages “serve a societal interest of punishing and deterring
outrageous and malicious conduct which is not likely to be deterred
by other means.” Behrens, 675 P.2d at 1186. Punitive damages,
therefore, are part of the system that the law imposes to enforce the
“basic duty” of due care for the safety of others that “the law
imposes on everyone.” See Union Pac. R.R. Co., 408 P.2d at 913.
Attempts to relieve oneself from the consequences of a blatant
disregard of that duty should not be looked upon with favor. To be
effective, a preinjury waiver of punitive damages must be clear and
unequivocal.
¶25 Before the district court, and again before us, Kruger argues
that neither the Agreement nor the Policy Manual “clearly and
unequivocally exempt [dōTERRA] from negligence or punitive
damages from personal injury or tort liability.” “When looking at the
language and purpose of the entire agreement,” Kruger argues,
“together with the surrounding facts and circumstances, [dōTERRA]
cannot point to anything that even hints at the idea that the
agreement intends to limit tort liability or punitive damages
stemming from physical injuries.”
¶26 We agree. And we start from the presumption against an
intention to waive punitive damages. We emphasize that a waiver
“is not achieved by inference or implication from general language,”
and that we look for language that is “clear and unmistakable.” Id.
at 914.
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¶27 The Agreement provides “dōTERRA . . . shall not be liable
for special, indirect, incidental, consequential, punitive, or
exemplary damages.” But it nowhere uses the words “personal
injury.” Nor does it suggest that Kruger was agreeing with
dōTERRA to waive her claim to punitive damages arising out of her
use of dōTERRA’s products. Rather, it states that Kruger will release
and indemnify dōTERRA from “any and all liability, damages, fines,
penalties, or other awards or settlements” that arise from or relate to
Kruger’s “actions in the promotion or operation of [her] dōTERRA
independent business and any activities related to it.” In context, the
language suggests that this provision contemplates a business deal
gone bad. For example, the Agreement notified Kruger that if
dōTERRA “is found to be in breach of the [Agreement], the
maximum amount of damages” she could claim would be “limited
to the amount of unsold inventory” she purchased from the
company and had “remaining on hand.”
¶28 In other words, the broad waiver the Agreement contains
might cover personal injury claims—after all, it uses language like
“any and all liability” and covers “any activities related to” the
operation of Kruger’s distributorship—but it does not do so clearly
and unambiguously. As we said in Union Pacific Railroad Co., if
dōTERRA had intended that Kruger waive punitive damages
occasioned by her use of ClaryCalm, “it would have been easy
enough to use that very language and to thus make that intent clear
and unmistakable.” Id.
¶29 The Policy Manual fares no better. The waiver in that
document, which was incorporated by reference into the Agreement,
says that dōTERRA “shall not be liable for any: . . . punitive, or
consequential damages . . . arising from or related to the operation or
use of the products . . . .” And while that is more explicit than the
language in the Agreement, the Policy Manual gives some examples
of the types of damages Kruger agrees to not seek from dōTERRA.
The Policy Manual states that the damages Kruger waived include,
“without limitation, damages arising from loss of revenue or profits,
failure to realize savings or other benefits, damage to equipment,
and claims against the [Wellness Advocate] by any third person
. . . .” Notwithstanding the Manual’s language that these examples
are included “without limitation,” these examples nevertheless give
context to and rein in the liability waiver that could otherwise be
read more broadly.
¶30 dōTERRA might have a persuasive argument that this
language could be read to include a waiver of punitive damages
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dōTERRA v. KRUGER
Opinion of the Court
arising out of the “operation or use” of its products. But dōTERRA
does not explain how, in light of the examples that follow, the Policy
Manual clearly and unambiguously gives notice that it effectuates a
waiver of punitive damages arising out of an injury caused by using
its products. Based on this contractual language, Kruger may have
given a “clear and unmistakable” waiver of her right to seek
punitive damages for potential “loss of revenue or profits” or
“failure to realize savings,” but Kruger did not give a “clear and
unmistakable” waiver of her right to seek punitive damages for her
personal injuries.
¶31 And, indeed, dōTERRA’s waiver does not resemble those
we have found to be clear and unmistakable. For example, in Pearce,
the waiver shouted that it applied to “ANY AND ALL LIABILITY,
CLAIMS, DEMANDS, AND CAUSES OF ACTION WHATSOEVER
ARISING OUT OF OR RELATED TO ANY LOSS, DAMAGE, OR
INJURY, INCLUDING DEATH.” 2008 UT 13, ¶ 5 n.1. Compared to
this clear expression of what it hopes to accomplish, dōTERRA’s
waiver is found lacking.
¶32 Simply stated, dōTERRA cannot overcome the presumption
against a preinjury waiver. See Union Pac. R.R. Co., 408 P.2d at 914.
By signing up to be a distributor of dōTERRA’s products, Kruger did
not give an “unmistakable” waiver of her right to sue dōTERRA for
personal injuries caused by its products. See id. Nor did Kruger
expressly disclaim her right to seek punitive damages for “injury” or
other forms of “bodily harm” to her own person, as plaintiffs have in
other cases. See, e.g., Pearce, 2008 UT 13, ¶¶ 5 n.1, 22–23. We therefore
affirm the district court’s decision to deny partial summary
judgment on Kruger’s ability to recover punitive damages.
II. TO THE EXTENT THE DISTRICT COURT RULED
THAT THE CONTRACT WAS ONE OF ADHESION,
WE VACATE THAT RULING
¶33 dōTERRA asks us to address another portion of the district
court’s ruling. In the course of reaching its main finding, the district
court distinguished a case that dōTERRA had cited: Hayes v. Oakridge
Home, 908 N.E.2d 408 (Ohio 2009). To distinguish Hayes, the district
court noted that “unlike the voluntary agreement in Hayes,
[dōTERRA’s] policy manual is a contract of adhesion.” dōTERRA
asks us to overrule that conclusion.
¶34 As an initial matter, we are not convinced that the district
court intended to conclude that the contract was one of adhesion.
Utah law characterizes a contract of adhesion as one that “is
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prepared in a standardized form and presented on a take-it-or-leave-
it basis to one occupying a disadvantageous bargaining position.”
Sys. Concepts, Inc. v. Dixon, 669 P.2d 421, 429 (Utah 1983). It does not
appear that Kruger argued to the district court that the Agreement
met that definition. And, certainly, the district court did not analyze
whether the Agreement satisfied the legal test before characterizing
it that way. As such, it appears that the description was an off-hand
descriptor the district court employed to distinguish Hayes.
¶35 We nevertheless understand that paranoia saves lives and
can sympathize with dōTERRA’s desire to not have the district
court’s statement bouncing around the litigation. Accordingly, we
vacate the district court’s “conclusion” that dōTERRA and Kruger
entered into a contract of adhesion. We emphasize, however, that we
express no opinion on that question and nothing we say prevents
Kruger from making that argument should the issue arise again in
the district court.
CONCLUSION
¶36 Kruger did not waive her right to sue dōTERRA for punitive
damages arising out of a personal injury when she signed
dōTERRA’s Agreement. Utah law requires that such a waiver be
clear and unambiguous. dōTERRA’s was neither. We affirm the
denial of partial summary judgment on that basis. To the extent the
district court ruled that the dōTERRA contract was a contract of
adhesion, we vacate that ruling without prejudice to Kruger’s ability
to revisit that question on remand.
JUSTICE HIMONAS, concurring:
¶37 I agree fully with Justice Pearce’s well-reasoned opinion. I
write separately only to express my conclusion that the Agreement’s
supposed waiver of punitive damages is contrary to public policy
and thus unenforceable.
¶38 “[F]or a contract to be void on the basis of public policy,
‘there must be a showing free from doubt that the contract is against
public policy.’” Eagle Mountain City v. Parsons Kinghorn & Harris,
P.C., 2017 UT 31, ¶ 15, 408 P.3d 322 (quoting Ockey v. Lehmer, 2008
UT 37, ¶ 21, 189 P.3d 51). We have set this high bar because we
“indulge[] in a strong presumption of freedom of contract.” Id.Nonetheless, I conclude that the legislature has left no doubt that
contractual waiver of punitive damages is contrary to public policy
in Utah.
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dōTERRA v. KRUGER
JUSTICE HIMONAS, concurring
¶39 I reach this conclusion because the legislature already
expressly prohibits contractual protection against punitive damages,
for public policy reasons, in one very important context. The Utah
Insurance Code provides: “No insurer may insure or attempt to
insure against: (1) a wager or gaming risk; (2) loss of an election;
(3) the penal consequences of a crime; or (4) punitive damages.”
UTAH CODE § 31A-20-101. The first three enumerated items reflect a
legislative intent that no persons can protect themselves from
financial loss arising from behavior detrimental to society. The
reason for the prohibition on insurance against criminal penal
consequences is obvious—we don’t want to incentivize crime by
allowing individuals to insure against losses caused by prison time.
Similarly, insurance against a (presumably otherwise legal) wager or
gaming risk is functionally no different than gambling—conduct
categorically criminalized in Utah. Id. § 76-10-1102(1). And allowing
a person to insure against an election loss could allow strong and
personal financial incentives to infect candidates’ motivation to seek
office and thus pervert our democratic process.
¶40 Which leaves the fourth area expressly precluded from
insurance coverage: punitive damages. To explain why it is included
in the statutory prohibitions, we apply “the principle of noscitur a
sociis—a word is known by the company it keeps.” Yates v. U.S., 574
U.S. 528, 543 (2015). While the principle is typically used to elucidate
the legislature’s intended meaning of a particular term in a statute,
the logic behind it applies with equal force here to explain the
legislature’s inclusion of a particular term. So, I infer that the
legislature prohibits insuring against punitive damages for the same
reasons it prohibits insuring against gaming, the outcome of
elections, and penal consequences—to prevent individuals from
financially safeguarding against their own bad behavior.
¶41 Other states have adopted similar statutes for the same
policy reasons. As one scholar explained,
[Punitive damages] deter[] future misconduct by
forcing the actor to contend with the possibility of
considering a devastating punitive damages award.
This is similar to the decision of state legislatures to
prohibit insurance companies from insuring punitive
damages. If a corporation could insure punitive
damages, it could control its environment and thus
plan around the risks of intentional misconduct.
Paul J. Zwier, Due Process and Punitive Damages, 1991 UTAH L. REV.
407, 426 (1991) (citing UTAH CODE § 31A-20-101).
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¶42 The public policy underlying the legislature’s decision to
prohibit contractually insuring against punitive damages applies
equally to contractual waiver of punitive damages. The fact that
there exists no statute expressly prohibiting waiver of punitive
damages is of no moment. After all, with a few notable exceptions
(most prominently the Uniform Commercial Code, UTAH CODE
§§ 70A-1a-101 to 70A-10-104), contract law is still dominated by the
common law. For these reasons, I would also hold that the
Agreement, to the extent it purports to indemnify dōTERRA against
any claims for punitive damages, is unenforceable as contrary to
public policy.
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